The White House has issued a statement warning of the risks of cryptocurrencies, citing several crashes over the past year. What does the description mean?
A tough year for cryptocurrencies
A roadmap to mitigate the risks of cryptocurrencies was signed last week by the White House, (outgoing) National Economic Council Director Brian Deese, White House Office of Science and Technology Policy Director Arati Prabhakar, Chairman of the Council of Economic Advisers Cecilia Rouse, and National Security Advisor Jake Sullivan. ” published.
The statement, at first glance, is not a big surprise. As you follow on Kriptokoin.com, the cryptocurrency industry has actually had a tough 2022. Even trying to keep up with the various companies declaring bankruptcy has resulted in court database fees increasing significantly. However, the statement points to a more cautious approach towards cryptocurrencies than US President Joe Biden’s executive order on crypto last March.
Filling regulatory gaps in the cryptocurrency space
The paper opens with a brief summary of a ‘hard year’ for crypto. Terra refers to the collapse of LUNA and FTX. But he notes that there is no contamination from the crypto industry to the broader financial ecosystem. About the disclosure, a senior management official says it’s part of Team Biden’s ongoing efforts to close regulatory gaps in the crypto ecosystem. In this context, the official makes the following statement:
We hope that Congress will take strong steps towards the needs in this area. But in addition to encouraging regulators to continue their efforts, we continue to move forward on the administrative front, enforcing many executive order recommendations to expedite sanctions and crackdown on bad practices in space.
He points to Congressional actions, such as Senate Banking Committee Sherrod Brown’s letter to Treasury Secretary Janet Yellen about crypto regulation. He says the White House’s own efforts will focus more on issues such as implementing executive order recommendations.
“Supporting responsible innovation!”
Last week’s statement pointed to previous White House announcements, such as the framework on digital assets, and statements issued by departments within the federal government. Also included is a joint statement from bank regulators released last week. The statement highlights the following:
But the events of the past year underscore that more is needed. Agencies have redoubled their anti-fraud efforts, including the proliferation of false or misleading claims about crypto assets insured by the FDIC. While the United States is already a global leader in the fight against money laundering and terrorist financing, enforcement agencies are devoting more resources to fighting illegal activities involving digital assets.
The last paragraph of the paper begins with a comment on supporting responsible innovation. But it ends with the authors reiterating their concerns about asking for safeguards to be taken. In this regard, the following points are mentioned:
Given the events of last fall, I think we were very cautious about the need to separate client assets requested in the FSOC reports, to gain additional visibility into vertically integrated firms, to implement many measures. Reducing conflicts of interest, addressing spot market jurisdiction, and that’s a long list. But I think they are integral to making sure that they protect consumers and support financial stability.
Upcoming hearings on cryptocurrencies
Next week will be busy. There will be four bankruptcy hearings, a hearing on Sam Bankman-Fried’s bond terms and Celsius’ proposal. Here’s what we watched.
Monday
- FTX bankruptcy hearing – appointment of auditor
- Genesis bankruptcy hearing
- Celsius bankruptcy hearing
Wednesday
- Celsius tender date
- FTX bankruptcy hearing
Thursday
- Sam Bankman-Fried bail hearing
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