Here’s what’s in Biden framework to regulate crypto

The Biden White House has just released its first-ever framework on what crypto regulation in the U.S. should look like — including ways in which the financial services industry should evolve to make borderless transactions easier, and how to crack down on fraud in the digital asset space.

The new directives tap the muscle of existing regulators such as the Securities and Exchange Commission and the Commodity Futures Trading Commission, but nobody’s mandating anything yet. The long-awaited direction from Washington has, however, captured the attention of both the crypto industry as a whole — and of investors in this nascent asset class.

The framework follows an executive order issued in March, in which President Biden called on federal agencies to examine the risks and benefits of cryptocurrencies and issue official reports on their findings.

For six months, government agencies have been working to develop their own frameworks and policy recommendations to address half a dozen priorities listed in the executive order: consumer and investor protection; promoting financial stability; countering illicit finance; U.S. leadership in the global financial system and economic competitiveness; financial inclusion; and responsible innovation. Together, these recommendations comprise the first, “whole-of-government approach” to regulating the industry.

Brian Deese, Director of the National Economic Council, and National Security Advisor Jake Sullivan said in a statement that the new guidelines are meant to position the country as a leader in governance of the digital assets ecosystem at home and abroad.

Here are some of the key takeaways from the White House’s new crypto framework.

One section of the White House’s new framework on crypto regulation focuses on eliminating illegal activity in the industry — and the measures proposed appear to have real teeth.

“The President will evaluate whether to call upon Congress to amend the Bank Secrecy Act, anti-tip-off statutes, and laws against unlicensed money transmitting to apply explicitly to digital asset service providers — including digital asset exchanges and nonfungible token (NFT) platforms,” according to a White House fact sheet.

The president is also looking into whether to push Congress to raise the penalties for unlicensed money transmitting, as well as potentially amending certain federal statutes to allow the Department of Justice to prosecute digital asset crimes in any jurisdiction where a victim of those crimes is found.

In terms of next steps, “Treasury will complete an illicit finance risk assessment on decentralized finance by the end of February 2023 and an assessment on non-fungible tokens by July 2023,” reads the fact sheet.

Crime is rife in the digital asset sector. More than $1 billion in crypto has been…