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(Kitco News) – A group of senior U.S. officials from the White House published a statement on Friday titled “The Administration’s Roadmap to Mitigate Cryptocurrencies’ Risks,” which outlined the Biden administration’s plans for cryptocurrencies and encouraged congress to “step up its efforts” in helping to develop regulations around the nascent asset class.
“While cryptocurrency might be relatively new, the behavior we have seen some cryptocurrency companies exhibit and the risks posed by this behavior are not. As an administration, our focus is on continuing to ensure that cryptocurrencies cannot undermine financial stability, to protect investors, and to hold bad actors accountable,” the blog said.
The authors went on to note that the White House has spent the past year focused on identifying the risks of cryptocurrencies and acting to mitigate them using the authority of the Executive branch. These efforts include the publication of the first-ever framework for crypto regulation in the U.S., which the White House released in September.
“To be sure, the technologies powering cryptocurrencies may offer ways to make payments faster, cheaper, and safer. But this framework identifies clear risks,” the authors wrote. “For example, some cryptocurrency entities ignore applicable financial regulations and basic risk controls – practices that protect the country’s households, businesses, and economy.”
Other concerns include misleading statements by promoters, conflicts of interest, failure to make adequate disclosures, and outright fraud.
The authors called on Congress “to step up its efforts” to help combat these issues and establish a clear regulatory framework for digital assets in the U.S.
“Congress should expand regulators’ powers to prevent misuses of customers’ assets—which hurt investors and distort prices—and to mitigate conflicts of interest.” the blog said. “Congress could also strengthen transparency and disclosure requirements for cryptocurrency companies so that investors can make more informed decisions about financial and environmental risks.”
Other recommendations include harsher penalties for violating illicit-finance rules, increased funding for law enforcement to improve their capabilities, and “following the steps outlined by the Financial Stability Oversight Council in its recent report, including addressing the risks of stablecoins.”
While the authors called on Congress to act, they stressed that any legislation that gets passed must avoid increasing the risks to investors or the financial system.
“Legislation should not greenlight mainstream institutions, like pension funds, to dive headlong into cryptocurrency markets,” the authors wrote. “In the past year, traditional financial institutions’ limited exposure to cryptocurrencies has prevented turmoil in cryptocurrencies from infecting the broader financial system. It would be a grave mistake to enact legislation that reverses course and deepens the ties between cryptocurrencies and the broader financial system.”
The blog finished by encouraging the implementation of safeguards that will help ensure that newly developed blockchain technologies are secure and beneficial to all of society and that the new digital economy works for everyone, not just a select few. “To put the right safeguards in place, we will keep driving forward the digital-assets framework we’ve developed, while working with Congress to achieve these goals,” the authors wrote.
Calls for public feedback
In other news from the executive branch of the U.S., the White House Office of Science and Technology Policy (OSTP) has announced that it is seeking feedback from the public that will go towards the development of a cryptocurrency policy.
“The White House OSTP requests public comments to help identify priorities for research and development related to digital assets, including various underlying technologies such as blockchain, distributed ledgers, decentralized finance, smart contracts, and related issues such as cybersecurity and privacy ( e.g., cryptographic foundations and quantum resistance), programmability, and sustainability as they relate to digital assets,” a notice from the OSTP said.
Individuals and organizations who are interested in providing feedback have until 5 p.m. EST on March 3 to submit their comments electronically to DARD-FTAC-RFI@nitrd.gov.
Statements from the public will be closely reviewed to identify critical focus areas in researching and developing cryptocurrencies, OSTP said. The other agencies involved with OSTP in this endeavor include the Fast Track Action Committee (FTAC) on Digital Asset Research, the National Science Foundation, and the Networking and Information Technology Research and Development (NITRD) National Coordination Office.
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