White House calls for regulators to bolster oversight of cryptocurrencies

01/31/2023 / By Ramon Tomey

The White House called for regulators to bolster oversight of cryptocurrencies, warning of the dangers that come with the burgeoning sector.

Four White House officials – National Economic Council Director Brian Deese, Office of Science and Technology Policy Director Arati Prabhakar, Council of Economic Advisers Chairwoman Cecilia Rouse and National Security Adviser Jake Sullivan – made the call through a Jan. 27 blog post. The said entry also outlined the executive branch’s plan to mitigate the risks that come with crypto.

“While cryptocurrency might be relatively new, the behavior we have seen some crypto companies exhibit and the risks posed by this behavior are not,” they stated. “As an administration, our focus is on continuing to ensure that crypto cannot undermine financial stability, to protect investors and to hold bad actors accountable.”

“Some cryptocurrency entities ignore applicable financial regulations and basic risk controls – practices that protect the country’s households, businesses and the economy. In addition, crypto platforms and promoters often mislead consumers, have conflicts of interest, fail to make adequate disclosures or commit outright fraud.”

The four officials outlined several examples of the dangers that come with crypto. They cited the May 2022 collapse of the TerraUSD stablecoin, and the later collapse of the crypto exchange FTX headed by Sam Bankman-Fried. Moreover, they also mentioned “poor cybersecurity across the industry” that allowed hackers hired by North Korea to steal $1.2 billion in digital assets to fund Pyongyang’s aggressive missile program. (Related: “Stablecoins” Terra and Luna crater, exposing some cryptos as highly unstable Ponzi scams.)

“Agencies are using their authorities to ramp up enforcement where appropriate and issue new guidance where needed. [They] have [also] launched – or are now developing –public awareness programs to help consumers understand the risks of buying cryptocurrencies. We encourage regulators to continue these efforts, including those designed to address and limit financial institutions’ exposure to the risks of digital assets.”

But according to macroeconomic strategist Jim Bianco, there is a risk that regulators may become co-opted by the same companies they are mandated to regulate – citing the example of the now-disgraced FTX founder.

“A lot of people in the industry were very uncomfortable with [Bankman-Fried] because they didn’t think he represented the best interests of the industry,” he remarked. “He was going to use his vision of regulation to build a moat around FTX.”

White House officials also ask help from Congress

The four officials also exhorted Congress to pass new laws to help curb criminal activity in the crypto space, urging lawmakers to “step up [their] efforts.” It suggested several proposals, including:

Expanding regulators’ powers to prevent misuses of customers’ assets and mitigate conflicts of interest.
Strengthening transparency and disclosure requirements for crypto companies.
Increasing penalties for violating illicit finance rules.
Subjecting crypto intermediaries to bans against tipping off criminals.
Collaborating with international partners for greater law enforcement capacity.

They warned that the legislative branch “could also make [their] jobs harder and worsen risks to investors and to the financial system.”

“Legislation should not greenlight mainstream institutions, like pension funds, to dive headlong into crypto markets. In the past year, traditional financial institutions’ limited exposure to crypto has prevented turmoil in crypto from infecting the broader financial system. It would be a grave mistake to enact legislation that reverses course and deepens the ties between cryptocurrencies and the broader financial system,” they noted.

But Peter Schiff, CEO and chief economist at Puerto Rico-based Euro Pacific Asset Management, begged to differ.

“We don’t need more government regulation,” he told the Epoch Times. “We need more free market regulation and personal responsibility.”

Listen to the Health Ranger Mike Adams discussing crypto leaders begging for regulation to clean up the massive fraud in the space.

This video is from the Health Ranger Report channel on Brighteon.com.