As part of its recommendations for crypto regulations, the Treasury is asking government authorities to vigilantly monitor the crypto sector for unlawful activity.
In the first of 3 recommendations to President Joe Biden, the Treasury also advised authorities to ‘aggressively pursue investigations, and continue to bring civil and criminal actions to enforce applicable laws with a particular focus on the consumer, investor, and market protection.’
The recommendations follow months of investigation where the Treasury said it received 260 unique responses following the issue of a request for comment (RFC) to various interested parties who gave their input and own recommendations.
According to a report published in September 2022, the interested parties included a variety of stakeholders:
- Communities impacted by digital asset mining
- Technology developers
- Industry stakeholders
- Financial institutions
- Consumer advocates
- Academics
From its investigation, the Treasury appreciates the continued growth of cryptocurrencies in the last years noting that they have been used by millions of people across the world, including at least 12 million Americans. However, the Treasury points out that cryptocurrencies are mostly used for trading other cryptocurrencies and downplays their impact on overall financial development.
The Treasury said:
‘Despite the recent expansion in the number and type of crypto-assets and activities, crypto-asset products are primarily used to trade, lend, and borrow other crypto-assets. Their use in performing other activities is currently limited and the potential for blockchain technology to transform the provision of financial services, as espoused by developers and proponents, has yet to materialize.
Nevertheless, it is possible that new products and use cases could emerge.’
In its second recommendation, the Treasury has said that regulatory agencies should use their existing mandates to address risks that consumers and investors may face. The institution is also asking all agencies to collaborate while pointing out the importance of authorities giving guidance statements in their jurisdictions, as some agencies in the United States have done.
‘Such actions benefit consumers and investors of crypto-assets and entities offering crypto-asset products and services by reducing uncertainty for business operations and raising conduct standards to facilitate responsible innovation.’
Permissionless blockchains are singled out as an area that can expose users to ‘novel forms of operational risks.’
The commission has also asked concerned bodies to unveil financial literacy programs to boost the public awareness of the new technologies.
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