The White House issued a statement titled “The Administration’s Roadmap to Mitigate Risks to cryptocurrencies”in which he talks about events in 2022 and what to expect from them this year.
The text seeks to show how the United States has been working towards regulation that does not stifle innovation, but which protects investors from fraud.
Among the frauds cited are the collapse of the stablecoin UST da Terra (LUNA), the crisis at the brokerage FTX and even a $1 billion theft by the Democratic People’s Republic of Korea to fund its “aggressive missile program.”
“2022 was a difficult year for cryptocurrencies”
It is the sentence that begins the text. Among the examples cited are Terra (LUNA) and FTX, although the regulatory body admits that the broker’s behavior is not exclusive to the crypto market.
“While cryptocurrency may be relatively new, the behavior we’ve seen some companies exhibit and the risks posed by that behavior are not new. As an administration, our focus is to continue to ensure that cryptocurrencies do not undermine financial stability, to protect investors and to hold wrongdoers accountable,” the letter reads.
The document also recalls measures of research and production of reports that the US president Joe Biden asked different bodies to understand the various biases of the crypto market and technology blockchain.
“First, experts from across government have established the first framework for developing digital assets safely and responsibly, while also addressing the risks they pose. To be sure, the technologies that power cryptocurrencies may offer ways to make payments faster, cheaper and more secure. But this structure identifies clear risks”, reinforces the text.
FTX is the example of what ‘not to do’
To serve as an example of the types of risks that the market involves, the text argues that “some cryptocurrency entities ignore applicable financial regulations and basic risk controls – practices that protect families, companies and the country’s economy”.
The mention is a clear reference to FTX, in which the former CEO himself admitted not having respected good risk control practices in interviews after the collapse.
“Additionally, cryptocurrency platforms and promoters often mislead consumers, have conflicts of interest, fail to make adequate disclosures, or commit outright fraud,” the White House statement said.
And, according to the document, there is still poor cybersecurity across the industry that allowed the Democratic People’s Republic of Korea to steal more than $1 billion to fund its aggressive missile program.
Next steps in crypto regulation
According to the text, government agencies are using their authorities to step up enforcement and issue new guidance when necessary.
“Banking branches issued joint guidance later this month on the need to separate risky digital assets from the banking system. Agencies across government have launched, or are developing, public awareness programs to help consumers understand the risks of buying cryptocurrencies.”
It is worth noting that asset segregation was one of the legal provisions removed from the text of the legal framework for cryptocurrencies in the Brazil. The amendment was rejected in the reviewing House vote, having been a very controversial point.
“We encourage regulators to continue these efforts, including those aimed at addressing and limiting financial institutions’ exposure to digital asset risks,” says the White House.
Other measures consist of enforcement agencies dedicating more resources to combating illicit activities involving digital assets. According to the text, inIn the coming months, the government will also reveal priorities for research and development of digital assets, which will help the technologies that power cryptocurrencies protect consumers by default.
As the White House argues, Congress should expand regulators’ powers to prevent companies from using their clients’ funds. This is another point that would address property segregation, an amendment that was rejected in the national Bill in Brazil.
Congress could also strengthen transparency and disclosure requirements for cryptocurrency companies, so that investors can make decisions while being more aware of financial and environmental risks. “To help law enforcement, it could strengthen penalties for violating illicit finance rules and subject cryptocurrency intermediaries to bans against reporting criminals.
The White House believes Congress could fund greater law enforcement capacity, including with international partners. For them, thisYou could limit cryptocurrency risks to the financial system by following the steps outlined by the Financial Stability Oversight Board in its recent report, including addressing stablecoin risks.
Source: Moneytimes
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