White House establishes framework for regulating cryptocurrency trading

US efforts to regulate the cryptocurrency market (Getty)

On Thursday morning, the White House issued a full framework for what should be the system for dealing with cryptocurrencies in the United States, in a move aimed at combating fraud attempts, while at the same time ensuring that American banks play their role in facilitating cross-border financial transactions.

The White House called on those responsible for regulating these transactions, such as the Securities and Exchange Commission (SEC) and the CFTC, to provide more protection for individuals dealing in those currencies against fraudsters prevalent in that industry.

The White House presented a set of reports outlining the vision of the administration of President Joe Biden to regulate and encourage the development of the digital asset industry, which is seen in many major financial centers as the future of current money.

The reports, according to the White House Fact Sheet, include recommendations for various US agencies to lead research into next-generation encryption technologies and create brainstorming venues for cryptographic regulations and standards.

The US move comes in the wake of many frauds, bankruptcies and closures that occurred in some cryptocurrency trading platforms, which caused the loss of millions of dollars to investors, as if the losses they incurred this year, as a result of the decline in cryptocurrency prices, were not enough.

During the period that passed this year, the price of Bitcoin, the largest cryptocurrency by market value, declined from more than 46 thousand dollars to less than 20 thousand dollars, with a loss rate of more than 55 percent, and other currencies witnessed similar declines.

Since reaching an all-time high in November of last year, with a total market value exceeding $3 trillion, cryptocurrency prices have witnessed a collective decline, against the backdrop of repeated US interest rate hikes and investors’ preference to stay away from high-risk assets, causing their market value to decline. The total is under $1 trillion.

Last month, the Securities and Exchange Commission indicted 11 people for creating and promoting what it saw as a fraudulent crypto pyramid, modeled on the famous Ponzi scheme, after raising more than $300 million from individual investors around the world, including those based in the United States.

In February, US officials confiscated $3.6 billion worth of bitcoins, in connection with the 2016 hack of Bitfinex, a cryptocurrency exchange.

The White House called on the concerned authorities to “vigorously pursue investigations and enforcement actions against illegal practices in the field of digital assets,” calling on the Office of Consumer Financial Protection and the Federal Trade Commission to “redouble their efforts” to monitor consumer complaints and identify the newly increasing abuse practices.

A while ago, the US Treasury recommended the need to continue research to develop a “digital dollar”, which can be considered a digital version of the banknotes currently in circulation, and achieve other advantages achieved by digital currencies.

Addressing reporters, US Treasury Secretary Janet Yalin said, “As history has sometimes painfully learned, innovation without proper regulatory action can lead to significant disruptions and damage to the financial system and people.”

Leave a Comment