On Friday, the White House put the blame on Congress for stalling on developing a national, comprehensive regulatory framework for crypto.
It outlined a number of actions that could be taken by lawmakers for controlling bad actors and frauds in the crypto space.
The White House
A blog post was published on Friday morning by the White House on the topic of crypto policy in which four of the senior advisors for President Biden said that Congress needs to improve its efforts.
The post shed light on some of the actions that Congress could take immediately for enhancing the standards of consumer protection in the crypto sector.
These moves include granting more powers to federal regulatory agencies, such as the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC).
They also include introducing disclosure requirements for crypto firms and strengthening transparency and also assisting law enforcement.
The latter can be accomplished by providing more funding and by improving financial rules, adding more penalties, and introducing legislation for regulating stablecoins, as mentioned in a recent report from the Treasury Department.
Stablecoins
Cryptocurrencies that have their values related to assets, such as the US dollar and gold, are referred to as stablecoins.
The purpose of adding support to these assets is to reduce the volatility and to keep the value of the stablecoins constant, even when the crypto market is volatile.
However, this theory has been put to test repeatedly and recently it happened in May of last year when the algorithmic stablecoin UST of the Terra ecosystem lost its peg to the US dollar and crashed.
This resulted in a disaster that wiped out almost $40 billion from the crypto market because UST was not backed by dollar reserves.
There was an algorithm that was developed for keeping its value constant, but it failed and contributed to the crypto winter that happened later.
Warning
The President’s advisors also cautioned in Friday’s note that matters could worsen because the Republican House of Representatives who have been sworn in recently could loosen regulations.
The advisors said that their jobs could become harder and investors’ risks could worsen as well as those to the financial system.
They said that implementing legislation that strengthens the ties between the broader financial system and cryptocurrencies would be a big mistake.
The warning seems to be referring to the new Subcommittee announced by the House Republican leadership, which is related to digital assets.
Representative French Hill will serve as the chair of the committee and he said that their goal is to ensure responsible innovation in the fintech and crypto sectors.
While the White House did not waste time blaming the Republicans for the lack of crypto-related actions, President Biden has not focused on the space in the two years that Democrats were in control.
A number of controversies occurred in the crypto industry during this period, which included the Terra collapse last year in May and the spectacular implosion of the FTX crypto exchange in November.
