The new guidelines affect existing regulators such as the Securities and Exchange Commission and the Commodity Futures Trading Commission.
The framework follows a March 2022 executive order in which U.S. President Biden urged federal agencies to study the risks and benefits of cryptocurrencies and publish official reports on their findings.
Over a six-month period, policy recommendations were developed to address the half-dozen priorities listed in the executive order:
- Protecting consumers and investors - Promoting financial stability
- countering illicit financing
- U.S. leadership in the global financial system and economic competitiveness
- financial inclusion
- responsible innovation.
Together, these recommendations constitute the first "whole-of-government approach" to regulating the industry.
Here are some key takeaways from the new White House vision:
Combating Illegal Funding:
"The president will consider whether to urge Congress to amend the Bank Secrecy Act, laws prohibiting disclosure, and laws against unlicensed money transmission to apply explicitly to digital asset service providers, including digital asset exchanges and non-exchangeable token (NFT) platforms. "," the White House newsletter said.
In May, the collapse of Terra USD, one of the most popular stable dollar-linked coin projects, cost investors tens of billions of dollars as they walked out in a panic that some compared to fleeing the bank. Attraction and publicity from respected financial institutions lent credibility to the project, adding to rumors of the project's legitimacy.
According to the White House, the collapse of this Stablecoin led to a series of bankruptcies that wiped out nearly $600 billion.
"Digital assets and the mainstream financial system are increasingly intertwined, creating channels for problems that could have spillover effects," the White House fact sheet says.
The concept goes on to warn that stablocoins could lead to devastating consequences if not combined with appropriate regulation.
To make stablecoins "more secure," the administration says Treasury will "work with financial institutions to strengthen their ability to identify and mitigate cyber vulnerabilities by sharing information and promoting a wide range of data sets and analytical tools, and teaming with other agencies. to 'identify, monitor and analyze emerging strategic risks associated with digital asset markets.
These efforts will also be carried out in conjunction with international allies, including the Organization for Economic Cooperation and Development and the Financial Stability Board.