Roadmap for cryptocurrency risk mitigation
On the 27th, the US White House announced a roadmap for reducing the risk of crypto assets (virtual currencies). At the same time as appealing the efforts of the executive branch, he requested the US Congress to step up its efforts to develop regulations.
However, he warned that merging cryptocurrencies with the existing financial system would be a “serious mistake.”
We’ll keep mitigating crypto risks by protecting investors and holding bad actors accountable. We’re ready to work w/ Congress to address regulatory gaps, but it would be a grave mistake to reverse course and deepen ties btw crypto and the financial systemhttps: //t.co/qLBetgMG1e
—Brian Deese (@BrianDeeseNEC) January 27, 2023
We will continue to reduce cryptocurrency risk by protecting investors and holding bad actors accountable. While we are ready to work with Congress to address regulatory gaps, it would be a grave mistake to reverse course and deepen the ties between cryptocurrencies and the financial system.
The statement co-authored by four White House advisers refers to the situation last year when general investors suffered huge losses due to the bankruptcies of related companies, such as Three Arrows Capital (3AC), Celsius Network, and FTX. In order to maintain financial stability, the administration has expressed its stance of emphasizing investor protection and seeking responsibility for malicious businesses.
As a concrete result, he took up the comprehensive framework for digital asset development announced last September. This initiative was conducted by each ministry and agency based on a presidential decree entitled “Realization of Responsible Development of Digital Assets” issued in March of the same year.
Relation:US Biden administration presents comprehensive development framework for cryptocurrencies and NFTs
The relevant government agencies are currently developing awareness programs to educate consumers about the risks of buying cryptocurrencies, according to the statement. The government will also announce its digital asset research and development priorities in the coming months, “so that the technology underpinning cryptocurrencies will help protect consumers by default.”
Requests to Congress
Advisers to the president have told Congress, “We need to step up our efforts.” Specific examples are given below.
- Expanding Regulatory Powers: Preventing Misuse of Client Assets, Reducing Conflicts of Interest
- Enhanced transparency and disclosure requirements for cryptocurrency companies: Helping investors make risk decisions
- Strengthening Penalties for Financial Fraud and Crime
- Prohibiting Cryptocurrency Brokers from Providing Information to Criminals
- Funding Law Enforcement
- Risk limits to the financial system, including stablecoins
While it would be “welcome” for Congress to pursue such initiatives, the statement said, “Congress could make our job harder and exacerbate risks for investors and the financial system.” pointed out. “Mainstream financial institutions like pension funds should not be allowed to jump into the cryptocurrency market carelessly,” he said.
The reason the turmoil in the cryptocurrency market over the past year has been prevented from spilling over into the wider financial system is that “traditional financial institutions have had limited exposure to cryptocurrencies,” advisers said. claim. warned as follows:
Enacting legislation that reverses course and deepens the ties between cryptocurrencies and the broader financial system would be a grave mistake.
This point seems to suggest the role of the “Subcommittee on Digital Assets, Fintech and Inclusion” announced by the Financial Services Committee of the US House of Representatives.
The committee will also play a key role in drafting legislation to address oversight and policy decisions for new asset classes. Rep. Warren Davidson will serve as vice chairman.
White House officials wholeheartedly endorse “responsible innovation that makes financial services cheaper, faster, safer and more accessible,” but concluded that it “requires commensurate safeguards.” is.
Relation:Responding to cryptocurrency-related policies, etc. US House of Representatives establishes “Digital Asset Subcommittee”
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