White House Studying Gaps in Oversight of Cryptocurrency
President Biden’s administration has been briefed by Treasury Department officials about the risks brought about by cryptocurrency.
As the world of cryptocurrency continues to grow and evolve, so do the challenges in mitigating the risks involved in digital currency. According to the Washington Post, the White House has been working with officials from the Treasury Department to highlight and study the bigger issues surrounding crypto and how best to tackle them.
Federal regulators from the Office of the Comptroller of the Currency and the Consumer Financial Protection Bureau (CFPB) are also getting involved.
White House officials contemplate issues surrounding crypto trading
The goal of these studies is to identify potential gaps in oversight such as whether cryptocurrencies can be utilized to fund illicit, illegal, or even terrorist activities. Additionally, one of the major reasons for the increased scrutiny is targeting those who are using digital currency to dodge federal taxes.
Efforts have been doubled recently in response to the market volatility which has increased concerns about the environmental effects caused by bitcoin (BTC) mining.
According to the Cambridge Center for Alternative Finance, the amount of energy used by bitcoin alone accounts for 0.52% of the energy consumed by the entire planet. The most popular cryptocurrency uses more energy than entire countries including the Netherlands, Philippines, and Argentina.
The big market swings seen recently have not only shaken investors to the core, but government policymakers are also becoming more and more concerned. The swing saw bitcoin nosedive more than 50% on the heels of setting a new all-time high.
The volatile movement of the market has been attributed to Elon Musk’s announcement that Tesla would cease BTC payments and China submitting new restrictions on crypto trading for financial firms.
Regulators apparently don’t believe the swings are a threat to the stability of the financial market as a whole, though the risk is enough that constant monitoring will be required.
In response to these issues, bank officials and lawmakers have begun working together to hash out policies that may alter crypto markets significantly. The House has already passed legislation that requires federal regulators to research and shed light on crypto rules as they currently stand.
Government officials lining up to collaborate
On Monday, Federal Reserve Governor Lael Brainard published an article that suggests a central bank digital currency could minimize some of these regulatory issues. Brainard believes that a government-backed digital currency could provide several relevant positives for both crypto traders and government entities alike.
The Securities and Exchange Commission chairman Gary Gensler is also sharing concerns and possible solutions to the regulatory issues. Gensler spoke at the recent FINRA conference and said that Congress needs to do more to make crypto rules less confusing and more encompassing.
In his statement, Gensler stated that “we need to do whatever we can to ensure that bad actors aren’t playing with working families’ savings and that the rules are enforced aggressively and consistently.”
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