The cryptocurrency industry, instead of democratizing financial services as its promoters have promised, has so far produced a minefield of fraud and theft that federal regulators should redouble the efforts of law enforcement to protect the public, the Treasury Department said in a new report.
Treasury urges federal regulators to get tougher on crypto fraud
The report — focused on crypto’s impact on consumers, investors and businesses — is one of three studies the Treasury is publishing Friday in response to a comprehensive review of the federal government’s approach to digital assets that President Biden ordered in March. The others focus on the threats crypto poses to combating illicit finance and what the technology could mean for streamlining payment systems, including through the launch of a US digital dollar.
White House officials initially framed the effort as an effort to ensure the United States takes advantage of crypto’s potential while mitigating risk. But the implosion since several high-profile crypto projects fueled a rout in digital asset prices and wiped out hundreds of thousands of investors, as major hacks continue to plague the industry. The downturn has sharpened policymakers’ scrutiny of the sector, which largely lacks federal oversight, and underscored the need for a coordinated approach from Washington.
“Together, we’re laying the foundation for a thoughtful, comprehensive approach to mitigating digital assets’ acute risks and — where proven — leveraging their benefits,” National Economic Council Director Brian Deese and National Security Adviser Jake Sullivan said in a statement.
On the consumer front, the report suggests that crypto poses a particularly acute threat to lower-income people lured by the promise of quick riches. “While the data for populations vulnerable to various impacts remain limited, available evidence suggests that crypto-asset products may pose increased risks to these groups, and the potential economic inclusion benefits of crypto-assets have largely yet to materialize,” it said, and noted. people reported $1.6 billion in losses from fraud and theft to the FBI in 2021.
This is a developing story and will be updated.
