The White House and the U.S. government released a statement on January 27th outlining their roadmap for mitigating the risks associated with cryptocurrencies.
The statement acknowledged that 2022 was a difficult year for the industry, with a “stablecoin” collapse and a major cryptocurrency exchange collapse causing significant losses for everyday investors.
Despite the challenges, the government stressed that the fluctuations in the cryptocurrency market had had minimal impact on the overall financial system thus far.
They acknowledged the necessity for ongoing efforts to prevent digital currencies from undermining financial stability, safeguard investors and hold fraudulent actors accountable.
First-Ever Framework For Developing Crypto Assets
Under President Biden’s guidance, the government has undertaken a comprehensive effort to identify the potential dangers associated with cryptocurrencies and implement measures to mitigate them, utilizing the powers of the Executive Branch.
The Administration has developed the first-ever framework for creating digital assets while ensuring safety and accountability and addressing the associated risks.
The framework identifies clear risks, such as cryptocurrency companies ignoring financial regulations and basic risk controls, as well as poor cybersecurity practices that can lead to theft and fraud.
In addition, agencies are ramping up enforcement and issuing new guidance to address the risks of digital assets. The banking agencies have issued joint guidance on “separating risky digital assets from the banking system.”
Public-awareness programs are being developed to help consumers understand the risks of buying cryptocurrencies. The government also plans to unveil priorities for digital assets research and development in the coming months to help the technologies powering cryptocurrencies protect consumers by default.
The statement also called on Congress to take action to prevent misuse of customers’ assets, mitigate conflicts of interest, strengthen transparency and disclosure requirements, and increase penalties for violating illicit-finance rules.
The government’s statement also warned against actions that would further integrate cryptocurrencies into the traditional financial system, emphasizing the importance of protecting the public through secure and inclusive technologies.
They pledged to advance the digital assets framework and collaborate with Congress to achieve this aim. However, the Administration’s goal is to implement measures to ensure that the new digital economy is secure, inclusive, and serves the interests of all citizens.
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