A Washington report calls on various government agencies to keenly supervise the crypto ecosystem. The new framework, released on September 16, 2022, hopes to address various risks and apply lawful actions in the digital asset industry. This event comes after Biden issued an executive order on virtual assets in March 2022.
Investigating Financial Crimes
According to the documents, the US government will greatly eliminate illicit activities in the crypto market. The report dictates that president Biden is examining several proposals that could counter malicious dealings.
One proposal may allow Congress to modify the Bank Secrecy Act and anti-tip-off statutes. Going by the report, amending these sections can help fight against unlicensed money transmission. Such laws may apply to digital asset service providers like NFT marketplaces and crypto exchanges.
The president is also exploring ways he can involve Congress in changing various federal statutes. As such, this change may enable the Department of Justice to conduct legal proceedings on digital asset crimes regardless of the justification. The Treasury further aims to finalize its risk assessment on NFTs and DeFi by mid-2023.
In the past, agencies like the Federal Trade Commission and the Consumer Financial Protection Bureau weren’t active in the virtual asset space. From the report, these financial bodies will now work on handling consumer complaints and enforcing lawful action on any illegal practices.
The CBDC Idea
The White House document also touched on the benefits and risks associated with CBDCs. Ideally, a Central Bank Digital Currency represents a virtual currency that is regulated by the government. In this case, the digital dollar is centralized and backed by the nation’s central bank.
Previously, Federal Reserve chair Jerome Powell said that the government would only implement CBDCs to eradicate the application of cryptocurrencies in America. According to him, that is the only advantage CBDCs can offer. The new report, however, gives a different outlook on the implementation of a digital dollar.
Going by the framework, Biden’s administration agrees that the CBDC concept could help establish technological innovation. Moreover, it is more efficient since it promotes faster cross-border transactions. Millions of users are currently unbanked and have limited access to financial services. In that respect, the document suggests that CBDCs can advocate for financial inclusion.
This goal is achievable since the digital dollar may enable access to a new category of customers. Moving forward, the government expects the Feds to continue researching and experimenting on the CBDC concept.
The Question of Financial Security
The emerging framework also seeks to work on promoting financial stability for consumers. The White House agrees that cryptocurrencies are gradually becoming part of the mainstream financial system. This connection often creates various side effects especially when there is no clear regulation.
In that regard, the framework looks forward to encouraging financial security on stablecoins. The Treasury will collaborate with different agencies to identify and examine emerging risks associated with the crypto market.
Financial institutions may benefit from the initiative because they will be able to identify and handle cyber vulnerabilities that may appear. Such actions will also succeed with the help of various international allies