The adoption of cryptocurrencies has become more widespread over time. Now major sporting events are being sponsored by companies like crypto.com. The greater the trend, the more regulators will rush to take action. Thus, SEC Chairman Gary Gensler said that cryptocurrencies could be subject to federal securities regulation. Now, the Biden administration is outlining a regulatory framework that will outline the next major guidelines.
A potential digital dollar is under consideration
President Biden has asked federal agencies to examine the balance between the risks and benefits of cryptocurrencies. The aim is then to obtain conclusions that will serve as a basis for action for the legislator. The regulatory framework released by the White House is in response to these findings. So far, the United States’ position on central bank digital currencies has not been clear. With this latest issuance, the Biden administration appears poised to take a step closer to a national digital currency.
The Federal Reserve continues to research, experiment and evaluate digital dollar bonds. Such an initiative could enable a more efficient payment system and provide a basis for new technological innovations. The project could facilitate faster cross-border transactions and would be environmentally sustainable (a recent example with the integration of the Ethereum blockchain). However, political issues regarding this adoption remain. Observance of the national interest is a sine qua non for the creation of a digital dollar.
Central Bank Digital Currencies: A Potential Threat to Stablecoins
The Fed Chairman previously said that the main incentive for the United States to launch its own digital currencies is to eliminate the use of cryptocurrencies. Jerome Powell added that there is no longer a need for stablecoins or digital currencies. Stablecoins has found itself on the radar of UST collision regulators for the Terra ecosystem. The framework suggests that if said asset class is not regulated, it could be problematic for investors.
The text notes that digital assets and the traditional financial system are increasingly interconnected. Therefore, volatility can have a snowball effect with a huge impact on investors’ capital. To make stablecoins safer, the US government wants to work with financial institutions to build their capacity to identify and mitigate cyber vulnerabilities by sharing information and promoting a wide range of data sets and analytical tools.
Central Bank Digital Currencies: Curbing Illicit Activities?
In addition to curbing the adoption of stablecoins, the White House’s stated goal is to control the currency. For example, money can no longer be laundered through cryptocurrencies. According to one section of the regulatory framework, the president will consider whether to ask Congress to, among other things, amend the Bank Secrecy Act and the laws against unauthorized transfer of funds so that they are explicitly enforced. Digital asset service providers – including digital assets and non-fungible tokens (NFT) exchanges.
In terms of what happens next, it says that the DFRA will be completed by the end of February 2023 and the DFRA by July 2023.
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For the broker-angels of the current monetary system, I am against DeFi, digital assets, and metaverse. Lawyer in Luxembourg, I am interested in cryptocurrency investment funds.