The White House Wants to Regulate Crypto
Last Friday (09.16.22) the Biden administration presented a framework for regulating cryptocurrencies and other digital assets. This action denotes the first time the executive branch has taken a position focused expressly on Crypto Crime.
The White House believes that American financial guard dogs should do more to reduce fraud and abuse in crypto trading as the US creeps ahead with plans for the asset class.
The Biden organization approached the Protections and Trade Commission and other regulators to “aggressively pursue investigations and enforcement actions against unlawful practices.” The proposal is part of a new White House report referred as a “comprehensive framework for the responsible development of digital assets.”
The report’s framework collects the discoveries of nine reports introduced to the White House in response to an executive order issued in March. In the time since we have seen a breakdown in both the value of nearly all-crypto assets and the failure of many companies that sell or create crypto assets.
So far, US oversight has been set apart by a patchwork of overlapping approaches and jurisdictional battles. The conclusions delivered on Friday by the White House follow months of reviews by agencies that were required in a March executive order.
While the Biden organization called for a range of actions by government agencies, it avoided reaching any firm determinations and in a few cases essentially called for more reviews.
So, maybe it’s too early to determine what will stick, but here are some key takeaways from this report.
Crypto Key Facts
- Recognizing the risks faced by crypto consumers, the framework of the proposal encourages the Security and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) to “aggressively pursue” probes into unlawful practices.
- The framework additionally asks the Federal Trade Commission (FTC) and the Consumer Financial Protection Bureau (CFPB) to intensify endeavors to manage customer grievances against deceptive practices by crypto companies.
- To prevent the utilization of crypto for money laundering, tax evasion, and financing acts of terror, President Joe Biden may propose a potential expansion of the Bank Secrecy Act (BSA) to include cryptocurrencies and nonfungible tokens (NFTs).
- The Treasury Department is directing an “illicit finance risk assessment” on decentralized finance (DeFi) platforms and a different one on NFTs — those are supposed to be completed by February 2023 and July 2023, respectively.
- One of the framework’s most critical recommendations requires an assessment for establishing a U.S. Central Bank Digital Currency or a digital U.S. Dollar—an area in which China has made significant progress — that may enable faster and simpler cross-border transactions.
- With an end goal to make the computerized economy more equitable, the framework calls for the extended adoption of “instant payment services” and the laying out of administrative approaches for “non-bank” payment platforms.
What to Watch For
The Depository will work intimately with financial institutions to “identify and mitigate cyber vulnerabilities” while other government agencies like the Environmental Protection Agency and the Department of Energy will be tasked with examining the environmental impact of digital assets like cryptocurrencies.
We at Morris + D’Angelo will certainly be watching this as it develops and will commit to reporting more on this topic as we believe that the Crypto Space will always be changing and evolving and more importantly, we believe that these financial platforms are potentially beneficial for the good of our communities and bring value hopefully without regulatory overreach.
If you have questions, need clarity, or need help determining how to navigate the Crypto Space to help retain or maximize your gains, please contact us at Morris + D’Angelo. This is our Expertise!
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