The Biden administration announced on Jan. 27 that it will introduce a new cryptocurrency regulatory framework in the coming months to combat the numerous cryptocurrency scams that have plagued the crypto market over the past year, causing millions of dollars in losses.
According to a White House statement, 2022 was a difficult year for cryptocurrencies. Therefore, this new regulatory framework aims to ensure that cryptocurrencies do not destabilize financial stability in the United States.
Potential moves by Congress to “double down on security efforts” through a new regulatory framework for cryptocurrencies include: expanding regulators’ powers to prevent asset misuse; strengthening transparency and disclosure requirements for cryptocurrency companies.
In addition, it tries to protect investors with new “liability requirements” for criminal actors. While these measures are not currently 100% integrated into the new regulatory framework, they show that regulators will not tolerate impunity for bad actors.
The press release was very strong on cryptocurrencies, but funding for additional law enforcement training — including international partnerships — stood out among the actions that could be approved.
Biden Administration Wants to Eliminate The Possibility of a New FTX
The White House has emphasized that President Biden attempts to avoid a new fraud, similar to the FTX scandal, which, according to court documents, was committed by the former CEO Sam Bankman-Fried and led to thousands of Americans losing billions of dollars.
The Biden Administration is committed to protecting American investors and consumers from fraud and financial crime. It also actively works with international partners to combat the illegal use of cryptocurrencies. Shortly after announcing the White House, the Federal Reserve published a press release with new regulations for the banking of cryptocurrencies (with or without FDIC protection).
In order to achieve this, the Biden Administration will also take steps to strengthen the regulatory structure around digital assets and cryptocurrencies, including strengthening the requirements for combating money laundering (AML) and Know your Customer (KYC), as well as for the implementation of other measures Protection of consumers and investors. The White House also emphasized that it would work with the congress to provide additional regulatory supervisory and assertive instruments to better protect American consumers and investors. The aim is to create a safe and transparent environment for growth and development of the industry for digital assets and cryptocurrencies.