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Regulation is Coming for Crypto Assets

On September 16th, the White House released a comprehensive framework for the responsible development of digital assets in the United States. This marks the first time that the U.S. government has provided guidance on crypto assets, and it signals a shift in attitude from simple tolerance to cautious engagement. The released framework outlines seven goals that the government wishes to achieve to properly regulate crypto assets.

While some of these goals are laudable, others are more controversial and will undoubtedly face opposition from the cryptocurrency industry. Nevertheless, it’s clear that regulation is coming to crypto assets in the United States, and this framework represents an important first step in that process. Let’s take a deeper look into these goals and help you understand what the government has planned.

Protecting Consumers, Investors, and Businesses

Digital assets such as cryptocurrencies are highly volatile, and sellers commonly mislead consumers about features or returns on these digital assets. There have been many incidents where people who invest in cryptocurrency lose their life savings due to unforeseen circumstances such as fraud. As if that’s not enough, noncompliance with applicable laws still remains widespread, leaving individuals and businesses alike still vulnerable. With about a quarter of digital coin offerings having either transparency or disclosure issues, this report could not have come any sooner.

The reports encourage regulators like the Securities and Exchange Commission (SEC) to take a more aggressive stance against unlawful practices in digital assets. That the CFPB and FTC redouble their efforts to monitor consumer complaints and take necessary steps against unfair and deceptive practices.

Regulatory and law enforcement agencies are to collaborate and share data and consumer complaints to better protect consumers from digital assets risks. The FLEC has been tasked with leading public-awareness efforts to help consumers understand the risks involved in digital assets.

Promoting Access to Financial Services

Now more than ever, it is vital that the digital economy works for all Americans. This means developing financial services which are secure and reliable as well affordable or accessible to everyone. The Federal Reserve is working to create a more inclusive financial system, one that works for all Americans. The organization has planned to launch FedNow in 2023 — a 24/7 interbank clearing network that will help facilitate instant payments. They’ll use it alongside The Clearinghouse’s Real Time Payments System already in place.

The President will consider agency recommendations to create a federal framework that regulates nonbank payment providers, and agencies will encourage the adoption of instant payment systems like FedNow. They’ll also work to improve cross-border payments that also integrate with the instant payment systems.

Fostering Financial Stability

With the rise of digital assets and their increasing integration into mainstream finance, we can expect to see turmoil have wild repercussions. Digital assets can be incredibly unstable, and the crash of TerraUSD in May 2022 has proven this. The Financial Stability Oversight Council (FSOC) is coming out with a report this fall discussing the risks of digital assets and what needs to be done about them. They will identify regulatory gaps and make recommendations for further action to foster stability.

Advancing Responsible Innovation

The NSF and OSTP are working together to develop a Digital Assets Research agenda. This will help to get fundamental research underway on topics such as next-generation cryptography, cybersecurity, and more. They’ll also continue support for social sciences education efforts that develop methods of informing stakeholders about safe digital asset use by providing them with adequate information training to not only protect themselves but help others too.

The Environmental Protection Agency will be tracking the environmental impact of digital assets. It’ll develop performance standards and provide local authorities with the tools to mitigate these harmful effects. Moreover, The Department of Commerce is convening a forum to bring together federal agencies, industry, and academia with civil society to share knowledge that can help shape future regulations.

Reinforcing the Country’s Global Financial Leadership & Competitiveness

U.S. agencies are going to leverage their positions in international organizations, like G7 and FSB, for example, where they can message specific values related to digital assets while continuing leadership roles on these types of projects at home or abroad. For instance, by promoting standards that reflect privacy concerns across borders with free trade agreements between countries who have differing laws dealing specifically with personal data ownership rights.

Enforcement agencies like the DOJ will collaborate with similar agencies in foreign countries. The State Department and similar agencies will also explore the possibility of technical assistance to developing countries involving building digital asset infrastructures.

Fighting Illicit Finance (Anti-Money Laundering and Countering the Financing of Terrorism)

The President has weighed in on the Bank Secrecy Act and how it should apply to digital asset service providers — exchanges and NFT platforms included. He will also consider urging Congress to raise penalties for those who provide services without permission. The government also plans to continue monitoring illicit financial risks associated with the digital asset sector and identify any gaps that need filling. To help out, the Treasury will conduct a risk assessment by February 2023 for decentralized finance and July 2023 for non-fungible tokens.

Exploring a U.S. Central Bank Digital Currency (CBDC)

The CBDC is a digital form of the U.S. dollar that could offer significant benefits like enabling a more efficient payment system. It has the potential to provide a foundation for technological innovation and offer better cross-border transactions. Even better, it’s environmentally sustainable.

The government has plans to explore this Central Bank Digital Currency because it may foster economic growth and protect against operational and cyber risks while safeguarding the privacy of sensitive data at the same time. It’ll also minimize risks associated with illicit financial transactions. Of course, on the downside, it may have unintended consequences, and these are the issues the government plans to address.

The administration developed policy objectives for the CBDC system. These policies reflect the Federal Government’s priorities: protecting consumers, improving the payment system, promoting economic growth, and providing interoperability with various platforms. The Federal Reserve has ongoing research into the evaluation and experimentation of this digital currency.


All in all, the release of the U.S. government’s comprehensive framework for the responsible development of digital assets is a step in the right direction. However, there is still a lot of work to be done in terms of research and implementation. The U.S. government needs to continue engaging with the crypto community and ensure that this new technology is properly understood and utilized. Only then can we expect to see widespread adoption of digital assets in the United States.

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