White House Says Congress Needs to Step Up Crypto Efforts

The Biden administration published a roadmap urging Congress to accelerate its crypto enforcement efforts.

“At President Biden’s direction, we have spent the past year identifying the risks of cryptocurrencies and acting to mitigate them using the authorities that the Executive Branch has,” begins the public statement, titled, “The Administration’s Roadmap to Mitigate Cryptocurrencies’ Risks,” which noted that 2022 was, “a tough year for cryptocurrencies.”

Events of the past year loomed large over the officials’ guidance, which focused on “continuing to ensure that cryptocurrencies cannot undermine financial stability, protecting investors, and holding bad actors accountable.”

The cross-departmental roadmap was drafted by four senior federal officials in the Biden administration and released Friday (Jan. 27) by the National Economic Council (NEC), an Executive Office of the President (EOP) established to advise the president on U.S. and global economic policy.

This, as the White House’s Office of Science and Technology Policy (OSTP) is separately asking for the public’s help in identifying key areas to prioritize within the crypto industry for further research and development, per a request last week (Jan. 26).

Brian Deese, director of the NEC; Arati Prabhakar, director of the White House OSTP; Cecilia Rouse, chair of the Council of Economic Advisors (CEA); and National Security Advisor Jake Sullivan all contributed to the document, which addressed much of its proposed guidance to the U.S. Congress.

Lawmakers Urged to Make Laws

In a speech last Wednesday (Jan. 25), Commodity Futures Trading Commission (CFTC) Commissioner Kristin Johnson formally called on Congress to modify several pieces of proposed digital asset legislation to expand the agency’s authority over the crypto marketplace.

“We must never allow a good crisis to go to waste,” Johnson said, before going on to push for greater CFTC authority to conduct due diligence on any firm seeking to purchase a 10% or greater equity interest in market participants registered with the CFTC.

As PYMNTs previously reported, legislators in the House Financial Services Committee have created a new crypto-focused subcommittee called the Subcommittee on Digital Assets, Financial Technology and Inclusion.

“Congress needs to step up its efforts,” stated the White House’s latest crypto roadmap, with administration officials adding that, “Congress should expand regulators’ powers to prevent misuses of customers’ assets.”

Among the many suggestions laid out in the statement include an urging for Capitol Hill lawmakers to increase transparency and disclosure requirements for crypto companies, guidance around strengthened penalties for violations of illicit-finance rules, and suggestions that U.S. governmental agencies work more closely with international law enforcement partners in the regulation and policing of the digital asset ecosystem.

“To be sure, the technologies powering cryptocurrencies may offer ways to make payments faster, cheaper, and safer,” the statement notes, while highlighting that, “thankfully, turmoil in the cryptocurrency markets has had little negative impact on the broader financial system to date.”

Public-Private Divide

In contrast to the views of private sector executives, who tell PYMNTS they are keen to see crypto realize value-based integrations into future product offerings of traditional, regulated financial institutions; the White House warns against “deepening ties between cryptocurrencies and the broader financial system,” even going so far as to call the prospect a “grave mistake.”

Behind the current federal administration’s cautions is the view that “the new digital economy should work for the many, not just the few,” and that there do not exist enough guardrails at present to properly protect American consumers from fraud or loss.

By “greenlighting” the integration of crypto into the mainstream, Biden officials warn that traditionally stable institutions, such as pension funds, who choose to make investments across the digital asset marketplace may unwittingly expose their retirement holdings and other critical funds to unacceptable levels of risk.

The Ontario Teachers’ Pension Fund, for example, had to write its nearly $100 million investment in failed cryptocurrency exchange FTX down to zero after the exchange’s disastrous collapse.

This comes as New York is considering a bill that would let consumers pay the state’s agencies with cryptocurrency, as “a means of payment of fines, civil penalties, rent, rates, taxes, fees, and charges owed.”

In the coming months, the Biden administration has indicated it will release findings from the OSTP request for information, which is meant to help spur development of, and research into, blockchain-based technologies and cryptocurrencies that protect consumers by default.