The Future of Money: The Biden Administration’s Take on Cryptocurrency and Expansion of Digital Assets.

Developments in digital technology in the financial services industry have led to dramatic growth in markets for digital assets. Digital assets provide possible opportunities for the U.S. to strengthen its leadership in the international financial system and remain at the technological frontline. However, based on the recent events in crypto markets, it is undisputed that they have their risks. Thus, The White House has announced its first-ever outline on what crypto regulation in the U.S. should look like — comprising ways in which the financial services industry should take steps to make borderless transactions (global payments) easier, and how to prevent fraud in the digital asset space.

The “Comprehensive Framework” does not create any new laws, but rather sets out a clearer image on how crypto policies in the U.S. will be conducted including guidelines for preventing crypto-related crimes and better protecting consumers and businesses. The measures will focus on keys areas including U.S. Competitiveness on a global state, consumer and investor protection and illicit activity. Protecting consumers is important to the administration due to the stories of investors falling into crypto scams and losing large amounts of money. The president has called for  “unparalleled focus of coordinated action” from federal organizations in lessening illicit finance and national security risks caused by cryptocurrencies and urging international alliance on the matter. However, part of the reason for this framework is also to give the U.S. a competitive edge over other nations in the crypto sector.

The Biden administration said on Friday (Sept 16) that the American government organizations must continue implementation on the digital asset sector and detect gaps in cryptocurrency regulation. The administration cited the possibility of mishandling in the digital asset sectors considering its growing role in global finance. This framework followed President Biden’s March executive order that asked government agencies to assess the risks and advantages of digital assets, including cryptocurrencies, and to investigate the likelihood of generating a US central bank digital currency, a type of government-controlled cryptocurrency. The president had assigned the Department of Commerce with “establishing a framework to drive U.S. competitiveness and leadership in, and leveraging of digital asset technologies.” Since then, in the six months, a total of nine reports from agencies have been presented. The reports insisted governors like the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) to release assistance and regulations for digital asset ecosystem threats, incorporating the possibility of cryptocurrencies to be used in money laundering or for fraud.

In addition, Treasury Secretary Janet Yellen told reporters “Innovation is one of the hallmarks of a vibrant financial system and economy, but as we’ve painfully learned from history, innovation without adequate regulation can result in significant disruptions and harm to the financial system and individuals”.

Furthermore, the framework goes on to single out stable coins, warning that they need to be paired with appropriate regulation. To make stable coins “safer,” the administration says the Treasury will work with other agencies to “classify, track, and investigate evolving strategic threats that relate to digital asset markets.” Those efforts are to happen in collaboration with international partners, including the Organization for Economic Cooperation and Development and the Financial Stability Board.

Article Written by Anushe Zebal

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