U.S. government agencies must double down on enforcement of the digital asset sector and identify gaps in cryptocurrency regulation, the Biden administration said Friday, citing their potential for abuse and harm, though noting their growing role in global finance.
The Treasury Department will also lead a group of government agencies that will consider a central bank digital currency, although the White House did not approve a digital dollar.
The government’s class action, announced in a series of published reports, follows an executive order signed earlier this year by President Joe Biden on “Ensuring Responsible Development of Digital Assets.”
“Innovation is one of the hallmarks of a vibrant financial system and economy, but as we have learned painfully from history, without adequate regulation, innovation can lead to significant disruptions and damage to the financial system and individuals,” said Treasury Secretary Janet Yellen. against reporters. .
The reports urged regulators such as the Securities and Exchange Commission and the Commodity Futures Trading Commission to provide guidelines and rules for ecosystem risks of digital assets, including the possibility of cryptocurrencies being used for money laundering or fraud.
The White House also said Biden would consider asking Congress to amend the Bank Secrecy Act to apply to providers of digital asset services, including cryptocurrency exchanges and platforms for non-replaceable tokens or NFTs. The BSA requires lenders to report suspicious transactions to the Treasury.
Biden will also consider recommendations from agencies to create a federal framework to oversee non-bank payment providers.
The Justice Department also said it was creating a Digital Asset Coordinator to oversee 150 federal prosecutors to investigate and prosecute crimes involving digital assets as part of its efforts “to address the growing threat of the illegal use of digital assets.” assets.”
Cryptocurrencies rose more than $3 trillion in value last year, but the industry has stumbled in recent months as investors have pulled out of risky assets due to rising interest rates.
Commerce Minister Gina Raimondo noted the risks, adding that well-regulated digital assets can make international payment systems more competitive and help underserved populations.
Brian Deese, the director of the National Economic Council, said cryptocurrencies can harm financial stability and national security without proper oversight.
“Regulation of cryptocurrencies is needed if digital assets are going to play a role we believe they can in fostering innovation and supporting our economic and technological competitiveness,” he said.
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