Need to do more – On paper, the White House wants to convey the image of an administration that wants to be more aggressive in terms of cryptocurrency regulationafter the disasters chained themselves in the industry last year.
When Terra, FTX, and Hacks Help Justify Tougher Crypto Regulation
In a January 27 post, the Biden administration called for a reinforcement regulation of the crypto industry in the United States, although it recognizes that cryptocurrencies can make “financial services cheaper, faster, more secure and more accessible”.
To defend his position, the executive pointed to the risks that cryptocurrencies pose to investors, financial stability, and national security. On these points, the note goes back to the debacles that have marked the crypto industry recently.
In this exercise, the collapse of Terra in May remains a must, as does the bankruptcy of FTX, even if the name of the crypto exchange is not explicitly mentioned there. The hackers from the North Korean group Lazarus also have their place on this sad podium.
Indeed, the note evokes the shortcomings in terms of cybersecurityand illustrates the consequences of these flaws, indicating that the hacks allowed North Korea to steal more than a billion dollars, in order to “fund its aggressive missile program”.
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The strengthening of the links between traditional finance and cryptocurrencies: a “serious mistake”, according to the White House
After painting a relatively gloomy picture of the crypto industry, with a small white spot for a bit of contrast, the article cites the various achievements on the regulation of cryptocurrencies, and advances recommendations.
He thus returns to the first framework that “the experts of the administration” would have designed with a dual purpose : supporting the development of digital assets, while considering the inherent risks – non-compliance with financial regulations by industry players, lack of transparency or fraudulent practices on the part of crypto platforms, etc..
Still remaining on this list of concrete achievements in terms of the supervision of cryptocurrencies, the post devotes a few lines to regulatory agencieswho would use their power to “reinforce the application of the law”, whenever necessary.
As a transition, the article uses the disasters that occurred during the crypto winter last year, to justify the need for “ Do more in terms of sector regulation.
It is in this context that the White House would thus plan to reveal its priorities concerning research and development on digital assets, in the coming months. This program is supposed to help the technologies powering cryptocurrencies protect consumers.
Recommendations for strengthening these regulations also advocate a scaling up efforts on the part of Congress in this area: extension of the powers of regulators, increased requirements in terms of transparency, reinforcement of sanctions in the event of violation of standards on illicit financing, etc.
Although a more aggressive Congress in the field of cryptocurrency regulation is therefore welcome, the article still evokes a paradox to avoid. By taking such actions, Congress must not project a reassuring image of the crypto industry, which would then encourage traditional financial institutions to “plunge headlong” into cryptocurrencies.
The post points out that strengthening the ties between traditional finance and cryptocurrencies would be “ a big mistake “.
The White House knows how to profit from cryptocurrencies in its own way. When the industry is going through a dark period, it makes remarks that do not necessarily go in the direction of the interests of crypto players. But during the election campaign, the future tenant of the white house didn’t say no to donations of over $5 million from FTX and Sam Bankman-Fried.
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