Tuesday, October 3, 2023

Congress called on by the White House to toughen cryptocurrency laws

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On Friday, 27th February 2023, The White House has come up with a roadmap for mitigating cryptocurrencies risk. As specified by this roadmap, the White House is calling on Congress to be stricter with any dubious players in the cryptocurrency space.

The White House has come up with an elaborate statement that emphasizes the point. In the statement are highlighted a few of the noteworthy and related stories from the year gone by, 2022.

The White House has specified that cryptocurrencies are among the newest financial instruments known to us. But, there is little that is new about the behavior that a few of the cryptocurrency companies have been exhibiting, and the risks that come to the fore as an upshot of this behavior.

As per the administration, their focus will continue to lie on ensuring that cryptocurrencies safeguard investors, do not undermine financial stability and keep dubious players accountable for their actions.

As per the statement, the experts at the White House have, for the first time come up with a framework wherein digital assets could be developed safely and responsibly. This is while the risks posed by digital assets are also addressed. 

But, in the statement, the White House has not categorically specified what the framework is meant to be. The focus of the statement, instead, has laid over the benefits of cryptocurrency and the risks that they pose.

Agencies are also mentioned in the statement. The administration urges the regulators to keep up their varied efforts. This includes minimizing how much financial institutions are exposed to the risk of digital assets. 

A recurring pattern is also easy to see in the statement. The White House does not encourage traditional institutions to invest in cryptocurrencies. The White House, on the same lines, encourages congress to take action over the matter.

As per the statement, the White House has called upon Congress to render more power to the regulators. This, the statement has specified, will be a staunch safeguard towards ensuring that the consumers’ assets do not counter misuse. This development, in case it occurs, will not just hurt investors but distort the prices as well.

So, when the regulators enjoy more powers, the problem of conflict of interests is also overcome, the statement specifies.

The White House calls on congress to bring more transparency into the picture. The disclosure requirements should have a higher degree of clarity associated with them. In case finance rules are violated, higher penalties should be imposed on the violators. Financial investments, similarly, are encouraged towards capacity building for law enforcement.

The only surprising point that is included in the statement is that the White House ceases to encourage traditional institutions to go ahead with cryptocurrency investments.

The statement has specified that mainstream institutions, such as pension funds should not be given a green light to plunge into the cryptocurrency market. To emphasize the point made, the statement highlights examples from the contemporary years. Since traditional financial institutions have faced but a limited amount of exposure to cryptocurrencies, they have been safeguarded against being infected. This is even while turmoils have taken place in the space of cryptocurrencies.

The statement strongly warns against the enactment of legislation that reverses this positive. The White House, hence, does not intend to deepen the existing ties amid the broader financial system and cryptocurrencies.

It is noteworthy that these developments and this statement have come at a time when there are some clear differences between what the administration wants to do and all that it can actually do. Following the midterm elections, Republicans are in control of the House of Representatives.

It should be noted that the nature of cryptocurrencies prevents it from becoming an issue that can be split across party lines. On both sides of politics, one is going to come across people who are either in favor of cryptocurrencies or not.

A deeper dissection of the statement by the White House

On Friday, 27th February 2023, the statement released by the White House was published by four senior U.S. officials in the Biden administration.

  1. Brian Deese, director of the National Economic Council
  2. Arati Prabhakar, director of the White House Office of Science and Technology Policy
  3. Cecilia Rouse, chair of the Council of Economic Advisors
  4. Jake Sullivan, National Security Advisor

The points emphasized in the statement included working in even closer coordination with international law enforcement partners.

It is noteworthy that none of the magnanimous cryptocurrency collapses of 2022 were named in the statement. This includes LUNA stablecoin and FTX which is now defunct and used to be a crypto exchange. But, both these cases had a reasonable bit of effect on the White House officials’ discretion. 

The statement has defined 2022 as a tough year for cryptocurrencies. As per the statement, the implosion of stablecoin that took place in 2022 led to a wave of insolvencies. This led to a major cryptocurrency exchange’s downfall.

The statement has specified that a few of the cryptocurrency entities fail to pay a requisite bit of attention to basic risk controls and the applicable financial regulations. Other important matters that seek attention are cryptocurrency platforms misleading consumers, not making sufficient disclosures, having a conflict of interest, or committing outright fraud.

It should be noted that the White House’s concerns and recommendations, as specified by the statement reiterate similar remarks made by U.S. regulators. This includes Kristin Johnson, Commodity Futures Trading Commission (CFTC) Commissioner. Earlier in the week, Johnson had called on Congress for spanning CFTC’s authority to conduct due diligence on crypto acquisitions.

The statement has specified that across the months to come Biden administration will take it upon itself to define priorities for digital assets research development. This way, the technologies that power cryptocurrencies will by default protect the consumers.

The statement emphasizes that safeguards should be in place to ensure that the new technologies are beneficial to everyone while being secure. This lets the digital economy work for many and not just a few.

#PUSH #bitcoinhindi #bitcoinupdate #cryptonews

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