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The Treasury Department will also lead a group of government
agencies that will consider a central bank digital currency,
although the White House stopped short of endorsing a digital
dollar.
The collective government action, announced in a series of
published reports, follow an executive order U.S. President Joe
Biden signed this year "on Ensuring Responsible Development of
Digital Assets."
"Innovation is one of the hallmarks of a vibrant financial
system and economy, but as we've painfully learned from history,
innovation without adequate regulation can result in significant
disruptions and harm to the financial system and individuals,"
Treasury Secretary Janet Yellen told reporters.
The reports urged regulators like the Securities and Exchange
Commission (SEC) and the Commodity Futures Trading Commission (CFTC)
to issue guidance and rules for digital asset ecosystem risks,
including the potential for cryptocurrencies to be used in money
laundering or for fraud.
The White House also said Biden would consider asking Congress
to amend the Bank Secrecy Act (BSA) to apply to digital asset
service providers, including cryptocurrency exchanges and
platforms for non-fungible tokens, or NFTs. The BSA requires
lenders to report suspicious transactions to the Treasury.
Biden will also consider recommendations from agencies to create
a federal framework to oversee non-bank payment providers.
The Justice Department also said it was creating a Digital Asset
Coordinator overseeing 150 federal prosecutors to investigate
and prosecute digital asset crimes as part of its efforts "to
combat the growing threat posed by the illicit use of digital
assets."
Cryptocurrencies surged past $3 trillion in value last year but
the sector has stumbled in recent months as investors have
pulled out of risky assets due to rising interest rates.
U.S. Commerce Secretary Gina Raimondo noted the risks, adding
that well-regulated digital assets could make international
payment systems more competitive and aid underserved
populations.
Brian Deese, the director of the National Economic Council, said
cryptocurrencies could harm financial stability and national
security without proper oversight.
“Regulation of cryptocurrencies is needed if digital assets are
going to play a role that we believe they can in fostering
innovation and supporting our economic and technological
competitiveness,” he said.
(Reporting by Hannah Lang in Washington; additional reporting by
Susan Heavey; Editing by Michelle Price and Josie Kao)
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