White House Announces First-Ever Comprehensive Framework for Responsible Development of Digital Assets
The market for digital assets has expanded considerably in recent years. Digital assets, with a market valuation of $3 trillion last November, have been bought by millions of people throughout the world, including 16% of adult Americans. Digital assets offer possible chances for the United States to maintain its technological edge and solidify its position as the world’s financial system’s dominant nation. But they also carry genuine hazards, as recent developments in the cryptocurrency markets have shown. Over $600 billion in investor and consumer funds were lost as a result of the so-called stablecoin crisis in May and the ensuing wave of bankruptcies.
As part of its “whole-of-government strategy,” which was initially described in a March 9 Executive Order (EO) issued by President Joe Biden, the administration unveiled its Comprehensive Framework for Responsible Development of Digital Assets on September 16, 2022.
This should be interpreted as a move by the current administration to develop a united strategy going forward. The phrase “regulation is coming” has been repeated frequently over the past few years in the digital asset business, yet little has changed aside from the occasional enforcement action. This might not change right away, but the Framework might give some regulators the policy initiative and direction they require to start the process of bringing much-needed regulatory clarity.
President Biden outlined his administration’s six top priorities for digital assets in the EO: protecting investors and consumers; maintaining financial stability; preventing money laundering; strengthening US leadership in the global financial system; promoting financial inclusion; and promoting responsible innovation.
The White House highlighted that nine multi-agency reports covering a wide range of policy issues related to digital assets had been submitted in response. A new report on the risks to financial stability posed by digital assets will be released in October 2022 by the Financial Stability Oversight Council of the US Department of the Treasury.
The Framework lists many of the submitted ideas and underlines the priorities outlined in the EO. The Framework, among other things, creates platforms to bring together various stakeholders in knowledge sharing and promotes the growth of tech sprints and other innovation-driven events. Additionally, it directs various authorities to monitor environmental effects and makes provisions for the development and financing of educational efforts.
Authorities in investigation and enforcement are urged to “redouble their efforts” in bringing offenders to justice. Additionally, the Framework urges agencies to publish guidelines and regulations that aim to mitigate many of the hazards mentioned in these studies.
The administration wants to promote regulation and innovation in this field, even though this framework does not represent a policy change. Most significantly, it facilitates the coordination of interagency cooperation for each of these goals.
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