As the midterm elections approach, the Biden administration seems determined to have a legislative framework capable of regulating cryptocurrencies. The White House has thus just drawn up for the first time, through the publication of a series of reports, a roadmap for the supervision of this booming market, where it is for the time being the leave do the most total that reigns across the Atlantic.
The objective is in particular to set up rules to limit the risks of financial destabilization, but also to fight against the use of cryptocurrencies by cybercriminals, and to set up a digital dollar. The release of this roadmap follows a presidential executive order signed last March, in which the president calls on federal agencies to thoroughly examine the risks and opportunities offered by cryptocurrencies, and to report accordingly.
Better regulate the stablecoins
The roadmap published by the White House, which is currently only a recommendation and not a law, highlights several areas where cryptocurrencies can bring benefits, including cross-border payments and financial inclusion. ” The publication of these reports is encouraging, as it constitutes an additional step in the right direction, namely providing the cryptocurrency industry with clear regulations. says Anna Rosenberg, a specialist in crypto-asset regulation and director of public affairs at FTI Consulting, an international consulting firm.
” If they insist on the need, for the Security and Exchange Commission [SEC, le gendarme de la Bourse, Ndlr] and the Commodity Futures Trading Commission [CFTC, qui régule le marché des dérivés, Ndlr], to investigate and crack down on breaches of the law in the industry, it is because it is important to establish clear rules so that companies can comply with them while doing what they do better: innovate. The reports also mention the benefits of digital currencies in terms of financial inclusion, which is a great thing. They can indeed integrate 7 million unbanked Americans into the financial sector, by lowering the barriers that our banking system has erected. »
The American executive also insists on the risks of financial destabilization induced by stablecoins, these cryptocurrencies whose value is backed by an element of the real economy, such as the dollar or gold, and therefore on the need to regulate them. ” Digital currencies and the traditional financial system are increasingly interconnected, with the risk of creating chain reactions “, notes the White House.
Last May, the collapse of TerraUSD, one of the most popular dollar-backed stablecoins, shook the cryptocurrency world and cost investors tens of billions of dollars.
In order to make stablecoins more secure, the Biden administration suggests that the Treasury Department “ works with financial institutions to improve their ability to identify and reduce cyber vulnerabilities by sharing information, datasets and analytical tools. »
The SEC, meanwhile, said it was looking into the recent “Merger” of the Blockchain Ethereum, stating that the proof-of-stake mechanism could legally be similar to financial lending, an activity that requires registration with of the authorities and to provide a certain amount of information aimed at protecting investors from conflicts of interest. In February, the SEC fined cryptocurrency lending startup BlockFi $100 million for failing to register.
Hit the hackers at the wallet
The White House also intends to crack down on the use of cryptocurrencies by malicious actors, such as hackers who deploy ransomware and then demand payment in digital currency to more easily evade authorities. With this in mind, it proposes the updating of certain laws to adapt them to the reality of cryptocurrencies, such as the Bank Secrecy Act, which notably requires financial institutions to help the government fight money laundering. But also to increase the penalties for illegal financial transfers, as well as to increase the powers given to the Department of Justice (DoJ) to prosecute fraud involving digital currencies.
Since the beginning of 2021, the Federal Trade Commission (FTC, federal agency which regulates the right to consumption and the obstacles to competition) estimates that the equivalent of more than a billion dollars has been stolen in cryptocurrencies. As it is estimated that less than 5% of victims of fraud in this area report it to the authorities, this figure is also very much underestimated.
” Cryptocurrencies have become a favored tool for malicious actors. By targeting digital asset transfers, the FBI has already succeeded in hampering their ability to make money by exploiting the vulnerability of individuals and businesses “, noted Chris Krebs, former director of the Cybersecurity and Infrastructure Security Agencyan American federal agency specializing in cybersecurity, during the Data Security Summit organized by Rubrik on September 14.
The sanctions adopted against Russia following the invasion of Ukraine have also opened a new door for cybercriminals, according to him. “ The Russian government has every interest in favoring hackers who seek to extort money from Westerners. In addition, cryptocurrencies can be used as a means of carrying out East-West financial transfers by circumventing sanctions. »
In this regard, the Department of Justice has just formed a new division dedicated to crime involving cryptocurrencies. A network of 150 federal investigators will thus be deployed in the United States to fight against money laundering and the financing of terrorism using cryptocurrencies.
Towards an e-dollar?
Finally, the White House also highlighted the benefits that a digital dollar could bring. In particular, we can read in one of the reports that a digital currency controlled by a central bank (or CBDC for Central Bank Digital Currency) would result in a payment system “ more efficient, would allow for more technological innovation, facilitate cross-border payments and be better for the environment. »
Such a currency would constitute a kind of digital twin of the dollar, which would be regulated by the Fed (the American central bank), which would also guarantee its value. It would differ in this from the already dematerialized currencies that individuals have in their bank account, and whose value is guaranteed by commercial banks. According to the Atlantic Council, a think tank, 105 countries around the world have started experimenting with a CBDC. The United States is therefore lagging behind.
A reaction to MiCA
These announcements from the White House come as Europe, for its part, adopted the draft regulation in the spring. Market in Crypto Assets (MiCA), which must regulate crypto-assets on the Old Continent. The text is due to come into effect by 2024, and this summer former CFTC director Chris Giancarlo pointed out that his country risks being left behind in cryptocurrency regulation if it doesn’t quickly adopt its own laws, the approach promoted by MiCA then being exported de facto in the USA.
“ We need our own framework of regulations for activities based in the United States, which is different from the European framework. I have a lot of respect for Europe, but the two markets are very different he said at an event in New York. Caroline D. Pham, who now heads the CFTC, said at the same event that the United States should make the rules rather than bend to others.
The Nasdaq has just announced that it will create a branch dedicated to cryptocurrencies, as well as a digital asset custody service for bitcoin and ether. Further proof that digital currencies are gradually gaining their titles of nobility in the United States.