Biden Administration Unveils New Framework for ‘Responsible Development’ of Crypto Assets

September 16, 2022 The Daily Hodl

Blockchain Association calls White House’s crypto framework a ‘missed opportunity’

September 16, 2022 Coin Telegraph

Critics claimed the Biden administration's reports focused on environmental concerns over crypto's energy consumption and illicit uses rather than the technology's benefits.

Members of the crypto space and advocacy groups reacted to United States President Joe Biden’s administration releasing a regulatory framework on digital assets, with many suggesting the White House focused on the potential negative aspects of crypto.

In a Friday announcement, the White House said that federal agencies and departments had submitted nine reports as required by Biden’s executive order on crypto from March. Among the information in the fact sheet included policy objectives for a U.S. central bank digital currency, ways to mitigate the possible impact of crypto’s energy usage on the climate, regulatory aims for enforcement actions, rules to address risks and consumer protection.

The Biden administration said that the Treasury Department will report on an “illicit finance risk assessment on decentralized finance” by February 2023, adding federal agencies will “continue to expose and disrupt illicit actors and address the abuse of digital assets.” In addition, the White House said it would support payment systems akin to FedNow, which the Federal Reserve planned to launch in 2023.

Crypto analyst Dylan LeClair and MicroStrategy co-founder Michael Saylor both criticized the administration’s stance on Twitter, claiming it was using environmental concerns as a pretext for extending its control over digital assets:

“If you don’t like how someone is using energy, pay a higher price than them [...] No amount of hysteric screeching about climate change will stop the next block from being mined.”

“Today’s reports and summaries from the Biden administration’s executive order on digital assets are a missed opportunity to cement U.S. crypto leadership,” said Kristin Smith, executive director of the U.S.-based Blockchain Association. “While intended to be part of a broader government and stakeholder effort to bring better regulation to crypto assets, these reports focus on risks — not opportunities — and omit substantive recommendations on how the United States can promote its burgeoning crypto industry.”

The White House's proposed framework is a fucking disgrace.

- Clear attack on proof-of-work by implying they will set environmental standards for mining.
- Pushing FedNow over crypto
- Framing everything as a potential scam or threat
- Harping on volatility and consumer risk
— The Wolf Of All Streets (@scottmelker) September 16, 2022

Speaking to Cointelegraph, Sheila Warren of the Crypto Council for Innovation said the policy recommendations seemed to be based on an "outdated and unbalanced understanding" of crypto, which could leave the details to be determined by other lawmakers or the next administration:

"In the hearing yesterday [on regulating crypto], many seemed worried about other countries overtaking the US. Regulation by enforcement is not regulatory clarity. If we regulate by enforcement, it also gives other countries a clear runway to figure out how the tech works for their interests, which may be contrary to the US'."

The reports on establishing a comprehensive regulatory framework for cryptocurrencies in the U.S. were some of the first required since President Biden announced the order in March, but the work is far from over. The Treasury Department and Fed will continue to research the implications of releasing a digital dollar. The White House said the Financial Stability Oversight Council will publish a report in October on the financial-stability risks of digital assets and related regulatory gaps.

White House publishes ‘first-ever’ comprehensive framework for crypto

September 16, 2022 Coin Telegraph

CFTC

The fact sheet sums up the efforts of nine federal agencies’ research over the past six months.

Following United States President Joe Biden’s executive order on Ensuring Responsible Development of Digital Assets, federal agencies came up with a joint fact sheet on six principal directions for the crypto regulation in the U.S. It sums up the content of nine separate reports, which have been submitted to the President to “articulate a clear framework for responsible digital asset development and pave the way for further action at home and abroad.”

The fact sheet was published on the White House official website on Sept. 16, and consists of seven sections: (1) Protecting Consumers, Investors, and Businesses; (2) Promoting Access to Safe, Affordable Financial Services; (3) Fostering Financial Stability; (4) Advancing Responsible Innovation; (5) Reinforcing Our Global Financial Leadership and Competitiveness; (6) Fighting Illicit Finance; (7) Exploring a U.S. Central Bank Digital Currency (CBDC).

Some of the sections don’t contain any particularly new information, emphasizing one more time the principles and policies which the President's Administration has been sticking to. For example, to protect consumers and investors, the reports urge regulators — the Securities and Exchange Commission and Commodity Futures Trading Commission — to “aggressively pursue investigations and enforcement actions against unlawful practices in the digital assets space.” At the same time, they don’t say anything particular about the regulators’ segregation of duty, which still remains one of the main regulatory problems in the country.

In order to promote access to financial services, federal agencies recommend creating a federal framework for nonbank payment providers and encouraging the adoption of instant payment systems like FedNow, whose launch is planned by the Federal Reserve in 2023.

As a part of advancing responsible innovation efforts, the Office of Science and Technology Policy (OSTP), which has recently published a critical report on the climate impacts of crypto mining, will develop a Digital Assets Research and Development Agenda to help mitigate the negative climate impacts. With the same goal the Department of Energy, the Environmental Protection Agency, and other agencies will consider further tracking digital assets’ environmental impacts.

While the fact sheet claims that the U.S. agencies will “leverage U.S. positions in international organizations to message U.S. values” related to digital assets, it doesn’t specify how exactly these values differ from the swiftly emerging European regulatory approach.

The security strategy implicates the amendments to the Bank Secrecy Act, anti-tip-off statutes, and laws against unlicensed money transmitting to apply explicitly to digital asset service providers, including exchanges and nonfungible token platforms.

The last, but perhaps the most important section of the fact sheet is dedicated to the U.S. CBDC. It reveals that the administration has already developed Policy Objectives for a U.S. CBDC system, but further research on the possible technological foundation of that system is needed. Still, the intent seems pretty serious as the Treasury will lead an interagency working group with the participation of the Federal Reserve, the National Economic Council, the National Security Council and the OSTP.

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