- L Misthos and M Bacina
White House crypto roadmap drives straight to Congress
The White House has published a "roadmap" outlining steps to mitigate the perceived risks identified as being associated with cryptocurrencies. The Administration's "Roadmap to Mitigate Cryptocurrencies' Risks" takes the form of a blog post cataloguing the actions which it has taken to date to progress crypto regulation and detailing further measures the Administration believes will help protect investors, prevent money laundering and the financing of illegal activities, and promote fair competition in the crypto market. Unfortunately it is heavy on platitudes but light on the detail which the industry has been seeking for years.
While noting the administration's efforts to step up enforcement action tackling bad actors in the industry, the roadmap also reiterates the need for legislative action:
Congress, too, needs to step up its efforts. For example, Congress should expand regulators’ powers to prevent misuses of customers’ assets—which hurt investors and distort prices—and to mitigate conflicts of interest. Congress could also strengthen transparency and disclosure requirements for cryptocurrency companies so that investors can make more informed decisions about financial and environmental risks.
Curiously, the White House cautions against enacting legislation which may deepen ties between cryptocurrencies and the broader financial system, looking to take a containment approach to crypto-assets which may prevent innovation and efficiencies spreading from innovative crypto-products into mainstream offerings.
The White House promises to work closely with regulatory agencies and other stakeholders to address the risks posed by cryptocurrencies. The roadmap also emphasizes the importance of international cooperation, which will of course be essential but, without details on what approach the US is taking (other than the hint of a containment only approach) it's hard to see how this promotes cooperation. The administration plans to engage with international partners to "promote consistency" in regulation and to share information and best practices. With the UK pushing to become a crypto-friendly hub and MiCA in the EU pushing in sensible directions while the US remains a "regulation by enforcement" jurisdiction, consistency of approach may be an increasing challenge.
The roadmap concludes by reiterating the Administration's support for "responsible technological innovations that make financial services cheaper, faster, safer, and more accessible". This appears to contrast with the containment approach also asserted.
While crypto regulation remains high on the US policy agenda in 2023, the administration's roadmap might be unfairly called more of a cul-de-sac given the lack of tangible details. The White House may be giving the wheel to Congress to drive legislation, which will risk knee-jerk reactions to collapses like FTX, and may push back the benefits of blockchain technology for the world's largest economy.