The White House has released a series of reports, including from the Treasury Department, outlining a federal plan for digital-asset regulation.
The reports — in response to
"We've seen in recent months substantial turmoil in cryptocurrency markets, and these events really highlight how without proper oversight cryptocurrencies risk harming everyday Americans, financial stability and our national security," Brian Deese, director of the National Economic Council, said in a call with reporters late Thursday.
"And that is why this administration believes now more than ever prudent regulation in cryptocurrency is needed if digital assets are going to play the role we believe they can in fostering innovation and supporting our economic and technological competitiveness," Deese said.
While senior administration officials said on the call that the proposed guidelines in the digital-asset space are meant to acknowledge the potential positive use cases for this technology, the recommendations emphasized protecting consumers and financial stability.
"Digital assets pose meaningful risks for consumers, investors and businesses," the White House said in a statement. "Prices of these assets can be highly volatile: The current global market capitalization of cryptocurrencies is approximately one-third of its November 2021 peak. Still sellers commonly mislead consumers about digital assets' features and expected returns, and noncompliance with applicable laws and regulations remains widespread."
Some of the possible violations concern banking regulators. In particular, the Federal Deposit Insurance Corp. has
The reports tell regulators, specifically the Securities and Exchange Commission and Commodity Futures Trading Commission, to "aggressively pursue investigations and enforcement actions against unlawful practices in the digital-assets space."
The reports also encourage the Consumer Financial Protection Bureau and the Federal Trade Commission to "redouble" efforts to monitor consumer complaints and to "enforce against unfair, deceptive or abusive practices." Agencies should also use their existing authority to issue guidance and rules to address current and emerging risks pertaining to cryptocurrencies, and should share data on consumer complaints.
Notably, the White House said that Biden will "consider agency recommendations to create a federal framework to regulate nonbank payment providers," the White House said in a fact sheet."
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More innovation in payments — as well as regulation to go along with it — could make sending and receiving money quicker, as well as more accessible, for unbanked Americans as well as those who have bank accounts but rely on services like check cashing and money orders for everyday needs, according to the fact sheet.
"Right now, some aspects of our current payment system are too slow or too expensive," Treasury Secretary Janet Yellen said in a call with reporters. "The report encourages continued work on innovations to promote a system that is more competitive, efficient and inclusive."
She said that a federal framework for payments regulation would "protect users in the financial system while supporting responsible innovations."
Nellie Liang, the Treasury's under secretary for domestic finance, has in the past said that
On a central bank digital currency, the Treasury will lead an interagency working group that will consider the potential implications of a CBDC and will share technical expertise across the government. In the working group, leaders of the Federal Reserve, National Economic Council, the National Security Council, the Office of Science and Technology Policy and the Treasury will meet "regularly."
The White House said that a U.S. CBDC could "help preserve U.S. global financial leadership" and could improve the effectiveness of sanctions but could also have consequences, such as runs to CBDC in times of stress.
The Biden administration is also recommending that agencies encourage the adoption of instant payment systems like FedNow, and that financial regulators should provide innovative U.S. firms with regulatory guidance and technical assistance.
Biden will also consider asking Congress to amend the Bank Secrecy Act and laws against unlicensed money transmitting to apply explicitly to digital-asset service providers, and perhaps urge Congress to raise the penalties for unlicensed money transmitting.
