White House Calls on Congress to ‘Step Up Its Efforts’ on Crypto Regulation
Officials in the Biden administration urged Congress on Friday to expand the authority of regulators to police the crypto industry.
Four senior U.S. officials in the Biden administration published a statement on Friday urging Congress to “step up its efforts” with respect to regulating the cryptocurrency market.
The officials – Brian Deese, director of the National Economic Council; Arati Prabhakar, director of the White House Office of Science and Technology Policy; Cecilia Rouse, chair of the Council of Economic Advisors; and National Security Advisor Jake Sullivan – wrote that Congress “should expand regulators’ powers to prevent misuses of customers’ assets … and to mitigate conflicts of interest.”
Other suggestions for Congress in the statement included strengthening transparency and disclosure requirements for crypto companies, strengthening penalties for violations of illicit-finance rules, and working more closely with international law enforcement partners.
The officials also made suggestions about what Congress should not do in terms of crafting new crypto regulation, including “greenlight[ing] mainstream institutions, like pension funds, to dive headlong into cryptocurrency markets.”
To do so, the officials warned, “would be a grave mistake” that “deepens ties between cryptocurrencies and the broader financial system.”
Though the spectacular collapses of neither the ill-fated LUNA stablecoin nor the now-defunct crypto exchange FTX were directly named in the statement, the effects of both loomed large over the officials’ guidance, which called 2022 “a tough year for cryptocurrencies” plagued by the implosion of “a so-called ‘stablecoin’ prompting a wave of insolvencies” and the subsequent downfall of “a major cryptocurrency exchange.”
“Some cryptocurrency entities ignore applicable financial regulations and basic risk controls … In addition, cryptocurrency platforms often mislead consumers, have conflicts of interest, fail to make adequate disclosures, or commit outright fraud," they wrote.
The White House’s concerns – as well as its recommendations – echo similar remarks made by U.S. regulators, including Commodity Futures Trading Commission (CFTC) Commissioner Kristin Johnson, who called on Congress earlier this week to expand the CFTC’s authority to conduct due diligence on crypto acquisitions.
However, the responsibility to regulate crypto does not fall only on congressional shoulders.
In their statement, the four officials said the Biden administration itself would be unveiling “priorities for digital assets research development, which will help the technologies powering cryptocurrencies protect consumers by default” in “the coming months.”
“Safeguards will ensure that new technologies are secure and beneficial to all – and that the new digital economy works for the many, not just the few,” they wrote.
UPDATE (Jan. 27, 15:46 UTC): Added additional detail on the officials' recommendations.
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