The White House today released a regulatory framework designed to address risks in the cryptocurrency ecosystem, as well as support the development of new digital asset technologies.
The release of the framework comes six months after President Joe Biden signed an executive order that directed the government to address the risks and harness the benefits of digital assets. As part of that effort, multiple government agencies have produced reports about the digital asset ecosystem. The agencies’ reports form the basis of the regulatory framework that the White House released today.
“The nine reports submitted to the President to date, consistent with the EO’s deadlines, reflect the input and expertise of diverse stakeholders across government, industry, academia, and civil society,” the White House stated.
A core priority of the framework is to fight illegal finance involving digital assets. Biden will evaluate whether to call on Congress to amend the Bank Secrecy Act, anti-tip-off statutes and laws against unlicensed money transmitting to apply explicitly to digital asset service providers. The term digital asset service providers encompasses, among other companies, operators of digital asset exchanges and nonfungible token platforms.
Biden will also weigh whether to urge Congress to raise the penalties for unlicensed money transmitting. Additionally, the White House stated today that Biden may call on lawmakers to “amend relevant federal statutes to let the Department of Justice prosecute digital asset crimes in any jurisdiction where a victim of those crimes is found.”
The Federal Reserve also plays an important role in the regulatory framework that the White House released today. Under the framework, the White House is encouraging the Federal Reserve to continue its research into the possibility of implementing a U.S. Central Bank Digital Currency, or CBDC. A CBDC is a proposed digital form of the U.S. dollar that could potentially be rolled out in the future.
The Biden administration has developed a framework, dubbed Policy Objectives for a U.S. CBDC System, that outlines a set of core priorities for the government’s initiatives in this area. To support the initiatives, the Treasury Department will lead an interagency group to consider the potential implications of a digital dollar. The interagency group will draw on technical expertise from multiple parts of the government.
“The leadership of the Federal Reserve, the National Economic Council, the National Security Council, the Office of Science and Technology Policy, and the Treasury Department will meet regularly to discuss the working group’s progress and share updates,” the White House detailed.
The newly released regulatory framework also encompasses a number of other initiatives. The initiatives will include the participation of multiple government agencies.
According to the White House, the framework calls for the Office of Science and Technology Policy and the National Science Foundation to develop a digital asset research agenda. The agenda is designed to advance research in areas such as cryptography and privacy. In parallel, the National Science Foundation will support initiatives that develop “methods of informing, educating, and training diverse groups of stakeholders on safe and responsible digital asset use.”
The Treasury Department will collaborate with financial regulators to provide legal guidance and technical assistance to U.S. companies developing new financial technologies. Meanwhile, the Energy Department and the Environmental Protection Agency will consider more extensively tracking digital assets’ environmental impact.
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