In an official blog post, the Biden Administration outlines its plan for reducing the risks associated with cryptocurrencies.
The roadmap begins by describing the implosion of LUNA and Terra in 2022 along with the industry’s ensuing disastrous contagion that resulted in numerous bankruptcies.
The post states that “many everyday investors who trusted cryptocurrency companies—including young people and people of color—suffered serious losses, but, thankfully, turmoil in the cryptocurrency markets has had little negative impact on the broader financial system to date.”
The Administration acknowledges that their priorities are to safeguard investors, ensure that cryptocurrencies cannot undermine financial stability, and hold bad actors accountable. In order to accomplish this, the roadmap states that experts within the administration have developed a framework for creating digital assets in a secure and responsible manner while addressing the risks they bring.
The roadmap reports that “at President Biden’s direction, we have spent the past year identifying the risks of cryptocurrencies and acting to mitigate them using the authorities that the Executive Branch has.”
It continues by describing how some cryptocurrency entities ignore risk management protocols and financial regulations. Additionally, it is claimed that cryptocurrency platforms and advocates frequently deceive customers, have conflicts of interest, offer insufficient disclosures, or even engage in outright fraud.
“The banking agencies issued joint guidance, just this month, on the imperative of separating risky digital assets from the banking system. Agencies across government have launched — or are now developing — public-awareness programs to help consumers understand the risks of buying cryptocurrencies,” the post reads.
The post also outlines the Administration’s view that Congress needs to step up efforts by expanding regulators’ power, enhancing transparency and disclosure standards, funding increased capacity building for law enforcement, and reducing the risks posed by cryptocurrencies to the financial system.
It is worth noting that Bitcoin was not specifically mentioned once in the roadmap.
The Biden Administration had previously published the “Executive Order on Ensuring Responsible Development of Digital Assets” in March 2022 and the “Climate and Energy Implications of Crypto-Assets in the United States” report in September 2022.