U.S. Treasury to Warn White House of Crypto Risks
The United States Treasury Department plans to warn the White House about the potential risks associated with cryptocurrencies if regulatory measures are not put in place, The Washington Post reported Thursday, citing two unidentified people familiar with the matter.
U.S. Treasury to Submit Crypto Reports to Biden
The sources noted that the Treasury would send four reports to the White House this month to convince top economic officials at the President’s Palace that crypto assets need stronger regulations to protect investors.
The assessment reports will focus on the pitfalls of digital assets in major areas, including fraud risks. Although the Treasury does not currently see crypto as a threat to the broader financial system, the department believes that it could change quickly, and the asset class could cause stability issues if not monitored closely.
People familiar with the matter further noted that one of the reports would highlight the financial risks of stablecoins. Recall that the Treasury previously called for stablecoin regulation last November, when crypto-assets peaked at a $3 trillion market cap.
The department plans to remind the Biden administration’s top economic officials about the dangers of stablecoins following the infamous Terra UST collapse in May.
Focusing on Crypto Risks
“Treasury is trying to create the analytical basis for very strong oversight of this sector of finance. They’re also hoping that with this kind of report, it becomes hard to have regulations that back off of tough oversight of the industry. This framework would serve as a benchmark, to say ‘Let’s be focused on these risks and not be carried away with the technology and industry promises.’,” one of the people said.
The Treasury’s reports are responding to President Biden’s executive order in March, which mandated government agencies to submit detailed recommendations focused on protecting U.S. crypto investors and businesses and positioning the United States as a leader in the global crypto market.
At the time of the executive order, the crypto industry saw it as a welcome development. However, the Treasury Department intends to tell the White House that the dangers of crypto could outweigh their benefits unless the government implements stringent regulations.
~ By William A. Frederick ~
