The White House releases a framework for regulating digital assets in the US

What’s new? The White House released the first-ever framework for regulating cryptocurrencies in the US, including ways for the financial services industry to facilitate borderless transactions and ways to combat fraud in digital assets. The concept was created within six months of an executive order issued in March in which President Joe Biden urged federal agencies to study the risks and benefits of cryptocurrencies and issue official reports. CNBC writes about it.

Information on CNBC's website

How did events develop? For six months, government agencies have been working to create concepts and policy recommendations to address priorities that include the protection of consumers and investors, promotion of financial stability, combating illicit financing, US leadership in the global financial system, and economic competitiveness. Taken together, these recommendations represent the first “comprehensive government approach” to regulating the industry.

National Economic Council Director Brian Deese and National Security Advisor Jake Sullivan said in a statement that the new recommendations are intended to position the country as a leader in managing the digital asset ecosystem, both among US citizens and abroad.

What suggestions have been made? In the innovations developed by the White House, special attention is paid to the potential of a central bank digital currency (CBDC). According to officials, it would be a digital twin of the US dollar: fully regulated, centrally managed, and fully backed by the Federal Reserve (Fed).

"A dollar in CBDC form is a liability of the central bank. The Federal Reserve has to pay you back," said Ronit Ghose, head of fintech and digital assets at Citi Global Insights.”

The White House noted that digital currencies, especially stablecoins, need mandatory regulation. Officials believe that otherwise, the use of such assets could lead to devastating consequences. The Terra ecosystem collapse in May, which led to a series of bankruptcies of cryptocurrency companies and caused nearly $600 billion in damages, is cited as an example.

It is also noted that the Treasury Department will complete its assessment of the risks associated with decentralized finance (DeFi) and non-fungible tokens (NFTs) by February and July 2023, respectively.

Earlier in the day, Joe Biden's administration expressed concern that mining could have a negative impact on the environment. The White House and regulators began discussing the introduction of measures regarding the carbon footprint of cryptocurrency mining.