The White House released a statement on Jan. 27 that provided United States President Joe Biden’s administration a roadmap for mitigating risks associated with cryptocurrencies. The administration’s legislative guidance addressed much of the document to the U.S. Congress.
The authors of the statement outlined a two-pronged path forward. They wrote:
“We have spent the past year identifying the risks of cryptocurrencies and acting to mitigate them using the authorities that the Executive Branch has.”
The first element in the road map is the administration’s “first-ever” comprehensive framework for digital asset development, released in September 2022. That document was based on reports mandated by the president’s executive order on Ensuring Responsible Development of Digital Assets issued in March 2022.
Second, executive agencies are increasing enforcement and issuing new guidance. According to the statement, government agencies are developing public awareness programs “to help consumers understand the risks of buying cryptocurrencies.” It mentioned banking regulators in particular and encouraged them to continue their efforts. The statement was issued the same day the Fed denied digital asset Custodia Bank membership in the Federal Reserve System.
We’ll keep mitigating crypto risks by protecting investors and holding bad actors accountable. We’re ready to work w/ Congress to address regulatory gaps, but it would be a grave mistake to reverse course and deepen ties btw crypto and the financial systemhttps://t.co/qLBetgMG1e— Brian Deese (@BrianDeeseNEC) January 27, 2023
Notably, the statement went on to provide a wish list of actions the administration would like to see from Congress, saying:
“Congress, too, needs to step up its efforts.”
The White House has a sizable list of tasks for legislators. Its recommendations include expanding regulators’ powers, strengthening disclosure requirements, strengthening penalties for misconduct, increasing funding for law enforcement and following the advice found in the Financial Stability Oversight Council report mandated by the executive order.
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The authors also took the opportunity to urge Congress not to do things too:
“Legislation should not greenlight mainstream institutions, like pension funds, to dive headlong into cryptocurrency markets.”
They noted that limiting such actions prevented the spread of the “turmoil in cryptocurrencies” to the broader financial system.