The White House has put together a framework for the “responsible development” of digital assets that includes a more aggressive push by regulators to take on fraud in the sector.
The framework comes six months after President Biden issued a sweeping executive order on the oversight of cryptocurrencies and is based on reports with recommendations on protecting consumers, investors, businesses financial stability, national security and the environment.
The reports call for the SEC and CFTC to “aggressively pursue investigations and enforcement actions against unlawful practices in the digital assets space”, and also asks the CFPB and FTC to “redouble their efforts to monitor consumer complaints”.
Meanwhile, the president will consider asking Congress to amend the Bank Secrecy Act to explicitly apply to digital asset service providers.
The Treasury will complete an illicit finance risk assessment on decentralised finance by the end of February 2023 and an assessment on non-fungible tokens by July 2023.
While signalling a crackdown on fraud, the White House insists it also wants to “foster responsible digital asset innovation”.
To this end, the Office of Science and Technology Policy and NSF will develop a Digital Assets Research and Development Agenda, while regulators are being encouraged to provide firms in the space with guidance and best-practice information.
On a potential digital dollar, the administration says it encourages the Federal Reserve’s research and will support this with a Treasury-led interagency working group to consider the potential implications of a CBDC.
The White House also wants to push efforts to improve the efficiency of cross-border payments by working to align global payments practices, regulations, and supervision protocols, while exploring new multilateral platforms that integrate instant payment systems.
Secretary of the Treasury Janet Yellen says: “The reports clearly identify the real challenges and risks of digital assets used for financial services. At the same time, if these risks are mitigated, digital assets and other emerging technologies could offer significant opportunities.
“These reports and their recommendations provide a strong foundation for policymakers as we work to realise the potential benefits of digital assets and to mitigate and minimise the risks.”