According to a recent article from the Washington Post, the U.S. Treasury Department intends to tell the White House that crypto assets are a source of major financial risk to investors. These risks exceed the potential benefits for investors unless the government rolls out new strong regulations against cryptocurrencies.
In this, the Treasury will share the opinion of two unnamed members of the Biden administration on crypto.
Treasury's report to highlight economic danger from crypto and stablecoins
As per the source, two persons in the Biden administration acquainted with the matter who preferred not to be named, the upcoming reports on crypto show that cryptocurrencies impose danger on investors in several major areas.
The reports say that, so far, crypto does not pose any direct danger or risk to the current financial system and it remains stable. However, the current state of things could change quickly, and it is important to maintain status quo, according to the reports.
One of the reports will speak particularly of financial risks coming from stablecoins backed by the U.S. dollar. Last autumn, the Treasury urged U.S. Congress to allow banking regulators to gain more power in order to oversee these crypto assets. However, lawmakers have not yet arrived at any conclusion on how this can be achieved.
One of the factors that added importance to this is the recent collapse of the algorithmic stablecoin made by Terra, which was worth $60 billion. Besides, it contributed to the current regression of the crypto market.
Crypto companies lobbying CFTC to replace SEC
Presently, lawmakers believe that the introduction of federal laws for crypto by Congress would help solve the issue, while large crypto companies are paying to support a lobby campaign for softer crypto regulation.
The crypto space wants to have the CFTC established as the chief regulatory body here. It is believed that the Commodity Future and Exchange Commission will treat the space better than the SEC is treating it at the moment.
So far, this initiative seems to be winning, with three bipartisan bills implemented this year to support the CFTC as the leading regulator.
However, the question remains how they are going to go about regulating while dividing the interests of the crypto space and of the those who defend interests of crypto users and investors.
The U.S. Treasury wants to set up the analytical basis for tough regulation of the crypto space, according to one of the unnamed sources, and the report should ensure that lawmakers will be unable to back off of strong oversight of crypto in order to focus on the risks from crypto, without paying attention to what crypto technologies and companies promise consumers.
These reports are the result of an executive order approved by President Joe Biden this spring. The order signed by the U.S. president demands that the overall approach of the federal government toward cryptocurrencies is reviewed. This includes every sphere, from the impact on the environment to what crypto can offer to promote financial inclusion.