White House plans to accelerate crypto regulation, journalists report

The Biden administration will task federal agencies with analyzing digital assets and preparing the appropriate regulatory framework to safeguard national security, Barron’s reports, citing informed sources.

According to a source familiar with the briefing, in the coming weeks the White House will issue an order requiring the relevant agencies to study cryptocurrencies, stablecoins and NFT. The act will touch the State Department, the Treasury, the National Economic Council and the Council of Economic Advisers.

“The initiative aims to comprehensively study digital assets and develop a set of rules that will bring coherence to the government’s actions in this space”, — said he.

The Barron’s source stressed that, likely the memo will touch the National Security Council, as cross-border crypto activity creates relevant risks.

The administration will grant the involved agencies from three to six months to prepare proposals. The White House will act as the coordinator.

The Bloomberg analyst Eric Balchunas noted that the administration’s initiative is in line with his theory that the SEC rejects spot Bitcoin ETF applications on higher-ups’ instruction.

In fact, you could reverse this and look at the seemingly head-scratching denial of what is clearly a good way to invest in crypto (vs using futures or CEF) was a foreshadow to a broader crypto crackdown. At least that’s one theory we threw out there in June. pic.twitter.com/IkfRI9z78U

— Eric Balchunas (@EricBalchunas) January 27, 2022

In his view, publication of the memo would be good news for the market:

“Ironically, but this could be good news with regard to potential spot approval, as in the coming weeks the Biden administration is set to issue an executive document outlining what they want to establish as the regulatory basis. This should clear the path for a spot Bitcoin ETF”.

Earlier Bloomberg reported that in February 2022 Biden intended to unveil a nationwide strategy for digital assets. Officials said the agencies would be tasked with assessing risks and opportunities of cryptocurrencies.

Coin Center, a non-profit advocacy group for the cryptocurrency industry, also drew attention to another bill that could adversely affect the development of the industry.

On January 25, the U.S. House Science, Space and Technology Committee introduced the America COMPETES Act of 2022. Coin Center noted that, in its current form, the document would give the Treasury Secretary the power to “block any cryptocurrency transactions through financial intermediaries without any rulemaking process or a deadline for the ban”.

2/ The so-called “special measures” provision (proposed by @jahimes) would essentially give the Treasury Secretary unchecked and unilateral power to ban exchanges and other financial institutions from engaging in cryptocurrency transactions. How would it do this? pic.twitter.com/f3tVow9nxA

— Jerry Brito (@jerrybrito) January 26, 2022

“So-called ‘special measures’ would give the Treasury secretary unchecked and unilateral power to ban exchanges and other financial institutions from participating in cryptocurrency transactions,” wrote Coin Center executive director Jerry Brito.

He explained that the Treasury Secretary already has the power to block accounts believed to be involved in money-laundering operations. However, for this he must notify the public and give them a chance to comment. Moreover, the blocking period cannot exceed 120 days.

The presented bill removes these restrictions. In Brito’s view, the bill will be passed “in one form or another”.

The Financial Services Industry Regulatory Authority will consider potential tightening of cryptocurrency trading rules.

The regulator also warned the SEC about tightening oversight of the digital-asset market.

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