After six months of research into the cryptocurrency industry, the White House on Friday published its first-ever comprehensive framework for the responsible development of digital assets that outlined the findings and suggestions of multiple government departments.
What Happened
On March 9, 2021, U.S. President Joe Biden signed the Executive Order (EO) on Ensuring Responsible Development of Digital Assets, directing the government to study cryptocurrency.
The resulting report did not establish any new laws but gave a clearer picture of how crypto regulations in the U.S. will be handled.
The new framework claimed to reflect "the input and experience of numerous stakeholders across government, business, academia, and civil society" and was based on research from nine studies presented to the president since his order.
The stakeholders had a wide range of concerns and their proposals go beyond the obvious (such as consumer rights, the environment and national security) to solidify the U.S.'s position as a worldwide leader in crypto by fostering private-sector innovation and global cooperation.
Sections of the framework include "Protecting Consumers, Investors, and Businesses," "Promoting Access to Safe, Affordable Financial Services," "Fostering Financial Stability," "Advancing Responsible Innovation," "Reinforcing Our Global Financial Leadership and Competitiveness," "Fighting Illicit Finance," and "Exploring a U.S. Central Bank Digital Currency (CBDC)."
Regulatory Suggestions
The framework gave regulators permission to continue coordinating efforts to enforce the law in the sector and exchange information on consumer complaints.
Examples of these regulators were the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC).
Through data exchange and analysis, the U.S. Treasury would actively engage financial institutions in helping to detect and reduce cyber threats.
In order to ensure crypto companies had regulatory guidance, the treasury was also charged with collaborating with regulatory authorities.
Through international institutions such as the Financial Stability Board (FSB) and the Organization for Economic Co-operation and Development (OECD), the treasury would extend this responsibility to American allies.
By the end of February 2023, the treasury should have finished its assessment of the danger of illicit financing associated with decentralized finance, and by the end of July 2023, it should have finished its evaluation of non-fungible tokens, according to the recommendations.
In order for the Bank Secrecy Act, rules against tip-offs and laws against unlicensed money transmission to specifically apply to providers of digital asset services — such as digital asset exchanges and nonfungible token (NFT) platforms — President Biden will have to make a decision, then potentially ask Congress for its thoughts.
According to the fact sheet, there were opportunities to make sure blockchain technology supports "a net-zero emissions economy and increasing environmental justice."
In a clear reference to Bitcoin's proof-of-work model, the White House Office of Science and Technology Policy stated earlier this month that crypto miners should reduce greenhouse gas emissions and suggested Congress may consider legislation to "limit or eliminate" high energy intensity consensus mechanisms.
The report also referred to "a potential U.S. CBDC" and listed numerous significant potential advantages for technology, the economy, security and individual liberty.
However, efforts in this direction are limited to a set of policy goals and an "interagency working group" headed by the treasury "to consider the potential implications of a U.S. CBDC, leverage cross-government technical expertise, and share information with partners."
Photo: The White House by David Mark from Pixabay
