According to the “Washington Post” report, the Biden administration, lawmakers and central bank governors are working hard to deal with the new challenges posed by cryptocurrency. Two people familiar with the matter revealed that earlier this month, US Treasury officials had notified the White House of the risks posed by cryptocurrencies.
People familiar with the matter said that the White House is studying potential “blanks” in supervision related to the crypto market, such as whether it can be used to fund illegal or terrorist activities. They also discussed whether ordinary retail investors buying cryptocurrencies need some protective measures. .
Currently, although they believe that risks are worth monitoring, federal regulators believe that the crazy volatility of the crypto market will not threaten the overall stability of the financial market.
The article pointed out: “They are aware of various risks and facts that need to be paid attention to, but they are still on the sidelines.”
At the same time, central bank officials and members of Congress are increasingly talking about policies that will significantly change the cryptocurrency market. The House of Representatives has passed and submitted bipartisan legislation to the Senate, instructing federal regulators to study and clarify cryptocurrency rules.
Lael Brainard, a member of the Federal Reserve Board of Governors, published an article on Monday highlighting the potential benefits of creating and managing digital currencies by the central bank. Government-provided digital currencies can provide a safer alternative to instant digital transactions, thereby reducing the market share of encrypted currencies.
The volatility of the cryptocurrency market is particularly high, which makes investors feel uneasy and highlights to policymakers the potential dangers of this rapidly growing industry. Bitcoin, the most popular cryptocurrency, plunged more than 50% from its previous peak during the broader cryptocurrency sell-off. Musk said that Tesla will no longer accept Bitcoin as a payment method, and Chinese officials have proposed to impose new restrictions on financial companies related to cryptocurrency, which seems to disturb the crypto market.
The recent market instability has exacerbated concerns about cryptocurrencies, including the environmental impact of Bitcoin mining. Government officials also believe that cryptocurrency makes it easier for criminals to transfer funds without detection.
Banking expert Gregg Gelzinis said, “Cryptocurrency is becoming a larger part of the financial system. As banks and other financial institutions become more closely connected with them, regulators should pay attention to how this market intersects with our financial regulatory framework. .”