The White House issued a statement on January 27 that provided the administration of United States President Joe Biden with a road map to reduce the risks associated with cryptocurrencies. Most of these documents are addressed to the US Congress at the direction of the administration’s legislation.
The author of the statement describes a two-way path forward. He wrote:
“We have spent the last year identifying the risks of cryptocurrencies and taking action to reduce them using the authority that the Executive Branch has.”
The first element of the roadmap is the administration’s “first” comprehensive framework for digital asset development released in September. The document is based on a report commissioned by the president’s executive order on Ensuring Responsible Development of Digital Assets published in March.
Second, executive agencies are increasing enforcement and issuing new guidance. According to the statement, the government agency is developing a public awareness program “to help consumers understand the risks of buying cryptocurrencies.” This is especially true for banking regulators and encourages them to continue their efforts. The statement was issued on the same day the Fed denied the membership of the Custodia Bank of digital assets in the Federal Reserve System.
We will continue to reduce crypto risk by protecting investors and holding bad actors accountable. We are ready to work with Congress to address regulatory gaps, but it would be a huge mistake to reverse course and improve the relationship btw crypto and the financial systemhttps://t.co/qLBetgMG1e
– Brian Deese (@BrianDeeseNEC) January 27, 2023
In particular, the statement goes on to list the actions the administration wants from Congress, saying:
“Congress must step up its efforts as well.”
The White House has quite a to-do list for legislators. The recommendations include expanding the powers of regulators, strengthening disclosure requirements, strengthening penalties for misconduct, increasing funding for law enforcement and following the recommendations found in the Financial Stability Oversight Board report provided by the executive.
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The author also took the opportunity to urge Congress not to:
“The law should not give the spotlight to major institutions, like pension funds, to dive directly into the cryptocurrency market.”
Limiting such actions prevents the spread of “chaos in cryptocurrencies” to the broader financial system, he said.