The White House wants to regulate crypto. Here’s what small business owners need to know
The Biden administration on Friday issued a framework for regulating cryptocurrencies and other digital assets, marking the first time the executive branch has taken a clear position on the issue.
The White House fact sheet presents a handful of key concerns, ranging from “protecting consumers, investors and businesses” to “promoting access to safe, affordable, financial services.” It even talks about exploring a digital currency from a US central bank.
The framework compiles the findings of nine reports presented to the White House in response to an order issued in March. In the time since, the sector has seen a collapse in both the value of almost all crypto-assets, and the failure of many companies that sell or create crypto-assets. Bitcoin has fallen in value by more than two-thirds since its peak in November 2021, and crypto-lending services platform BlockFi, which was valued at $3 billion in an investment round in March — with earnings numbers so strong that it topped the Inc. 5000 list of fastest-growing growing companies in America this year – rumored to be on the market for less than $25 million.
For the vast majority of companies, which either do not use cryptocurrencies at all or only use them as a medium of exchange, any regulation should not lead to major changes.
For companies built to sell or create new digital assets, this is a clear signal that — at least as far as the White House is concerned — the Wild West days of operating more or less without government oversight are seriously over. The framework calls on both the Securities and Exchange Commission and the Commodity Futures Trading Commission to increase efforts to enforce existing laws and regulations in the area – and to issue new rules as deemed appropriate, while sharing data on consumer complaints.
The White House also said it will launch public awareness efforts through the Financial Literacy Education Commission “to help consumers understand the risks associated with digital assets, identify common fraudulent practices and learn how to report misconduct.” The framework also announces in several places an executive goal to reduce the environmental impacts of cryptocurrency.
Alongside that is an effort to promote the United States as a leader in digital assets, including cryptocurrencies. The White House creates a “Digital Assets Research and Development Agenda” to kick-start basic research, and directs the FSA and financial supervisory authorities to help companies develop financial technologies through information sharing and other forms of collaboration, in addition to working in the international arena to “leverage U.S. positions in international organizations to send a message to U.S. values related to digital assets.”
The framework also clarifies efforts to reassert the dollar in digital form as a viable alternative to cryptocurrency. The viability of cryptocurrency as a medium of exchange has long rested on perceived shortcomings of government-issued currency, such as payment systems that are slow and cumbersome relative to cryptocurrency, even as dollars mostly trade hands these days as electronic records, and not hard cash. The White House wants the federal government to make the digital dollar a fuller and more customer-responsive part of American commerce, for example through instant payment systems, regulation of non-bank payment providers and the creation of procedures for the international exchange of digital dollars. The framework concludes with a call to consider a US central bank digital currency.
