The White House has released the framework for cryptocurrencycurrency regulation based on the earlier executive order from President Biden.
The framework — a combined effort of several federal agencies — offers several recommendations on regulating cryptocurrencycurrency, cracking down on cryptocurrency fraud, and bringing the financial services industry up to standard.
CNBC reported that a statement jointly issued by the Director of the National Economic Council, Brian Deese, and National Security Advisor Jake Sullivan said the guidelines would make the U.S. a global leader in regulating digital assets.
Digital Dollar plans
The framework mentions the possibility of a U.S. central bank digital currency (CBDC) project — the Digital Dollar.
According to the report, such innovation could have significant benefits as it could create a more efficient payment system and lay the groundwork for technological innovations, among others.
The framework stated that the CBDC “could promote financial inclusion and equity by enabling access for a broad set of consumers.”
Crypto and the broader economy
The framework expressed concerns about digital assets and how they are intertwined with the traditional financial market, which could lead to economic instability resulting from a contagion.
The framework mentioned how Terra’s ecosystem crash showed how the industry could impact the broader financial system.
Per the report, there should be more regulations for stablecryptos, and the U.S. Treasury will need to “work with financial institutions to bolster their capacity to identify and mitigate cyber vulnerabilities.”
The framework also stated how malicious players use cryptocurrency for illegal activities and the need to eradicate this activity. It added that:
“Digital assets have facilitated the rise of ransomware cybercriminals; narcotics sales and money laundering for drug trafficking organizations; and the funding of activities of rogue regimes.”
According to the framework:
“The President will evaluate whether to call upon Congress to amend the Bank Secrecy Act, anti-tip-off statutes, and laws against unlicensed money transmitting to apply explicitly to digital asset service providers — including digital asset exchanges and nonfungible token (NFT) platforms.”
A Treasury Department report also recommended the need for more regulations in the cryptocurrency sector.
Treasury Secretary Janet Yellen said:
“(The) reports and their recommendations provide a strong foundation for policymakers as we work to realize the potential benefits of digital assets and to mitigate and minimize the risks.”