President Biden's administration is pushing for more regulations on digital assets such as cryptocurrencies, and it's advocating for tougher oversight at a time when the popularity of virtual money continues to grow.
In a series of new reports released Friday that lay out recommendations, the White House pointed to the volatility of virtual currencies and a recent slump that has led to trouble across the crypto landscape.
"Digital assets pose meaningful risks for consumers, investors, and businesses," the Biden administration said, noting there are "frequent instances of operational failures, market manipulation, frauds, thefts, and scams."
U.S. regulators, along with their global counterparts, have long been wary of cryptocurrencies, even as they have acknowledged the potential of virtual currencies, saying, "Digital assets present potential opportunities to reinforce U.S. leadership in the global financial system and remain at the technological frontier."
This year, cryptocurrencies TerraUSD and Luna collapsed as part of a broader rout, and today, bitcoin's value is about a third of what it was last November.
Among other directives, the new reports call on financial regulators to crack down on unlawful practices and to "address current and emergent risks."
Congress is looking at new regulations
In recent years, the Securities and Exchange Commission has brought enforcement actions against crypto companies. The White House wants that to continue.
"The reports encourage regulators, as they deem appropriate, to scale up investigations into digital asset market misconduct, redouble their enforcement efforts, and strengthen interagency coordination," said national security adviser Jake Sullivan and Brian Deese, director of the National Economic Council, in a statement.
The administration also suggests that the Consumer Financial Protection Bureau and the Federal Trade Commission "redouble their efforts to monitor consumer complaints and to enforce against unfair, deceptive, or abusive practices."
At the same time, the administration has urged Congress to give regulators more concrete guidance.
That is starting to happen. In June, Sen. Kirsten Gillibrand, D-N.Y., and Sen. Cynthia Lummis, R-Wyo., introduced a proposal to create a regulatory framework for digital assets.
The reports out on Friday stem from an executive order that Biden signed in March to ensure the "responsible development of digital assets." It was intended to streamline the federal government's approach to digital assets.