The White House published a so-called “roadmap to mitigate cryptocurrencies’ risks” on Friday that calls on Congress to toughen laws to target dubious players in the industry.
The long-winded statement highlights some of the negative stories from last year, stating that while cryptocurrency might be relatively new, “the behavior we have seen some cryptocurrency companies exhibit and the risks posed by this behavior are not.” The administration claims its focus is on continuing to ensure that cryptocurrencies cannot undermine financial stability, protect investors and hold bad actors accountable.
The statement claims that experts across the administration have laid out the “first-ever framework” for developing digital assets in a safe, responsible way while addressing the risk they pose. Precisely what that framework is meant to be is not spelled out versus making a list of statements about the benefits and risks presented by cryptocurrencies.
Agencies get a mention, with the administration urging regulators to continue various efforts, including limiting the exposure of financial institutions to the risk of digital assets. A recurring theme in the statement is that the administration does not like the idea of traditional institutions investing in cryptocurrency, which then comes to a head with a call on Congress to take further action.
The administration calls on Congress to expand regulators’ powers “to prevent misuses of customers’ assets—which hurt investors and distort prices—and to mitigate conflicts of interest.” Congress is called upon to strengthen transparency and disclosure requirements, strengthen penalties for violating illicit-finance rules and fund greater law-enforcement capacity building.
The points seem fairly reasonable – additional enforcement and tougher penalties, but the bite comes towards the end – the Biden administration does not want traditional investors investing in cryptocurrency.
“Legislation should not greenlight mainstream institutions, like pension funds, to dive headlong into cryptocurrency market,” the statement reads. “In the past year, traditional financial institutions’ limited exposure to cryptocurrencies has prevented turmoil in cryptocurrencies from infecting the broader financial system.”
“It would be a grave mistake to enact legislation that reverses course and deepens the ties between cryptocurrencies and the broader financial system,” the statement adds.
What the administration wants and what it can deliver are two different things in 2023, with Republicans taking control of the House of Representatives following the mid-term elections. However, cryptocurrency policy is not an issue split down party lines – there are people on both sides of politics who are for and against cryptocurrency.
An article published by Coindesk on Jan. 25 highlights some of the cross-party positions, such as the Congressional Blockchain caucus that has four co-chairs – two Republicans and two Democrats.
The White House has been prone to making broad, sweeping statements and wishlists that are primarily all talk and very little action and this so-called roadmap appears to be another. Cryptocurrency regulation may well get a look in during the 118th Congress, but with Republicans controlling the House agenda, nothing the White House says will influence what will be proposed and when.
