In March, President Joe Biden signed an executive order requiring a comprehensive review of the cryptocurrency industry. People familiar with the matter told The Washington Post that the Treasury Department has prepared reports, and that the reports recommend major regulation of the cryptocurrency industry.
The reports note that cryptocurrencies pose an economic danger in several areas. The review concluded that crypto is not a “threat” to the stability of the financial system at large, but that could change abruptly.
According to the sources, who spoke to The Post on condition of anonymity, one of the reports focuses on stablecoins, a form of digital currency whose value is pegged to the dollar. Earlier this year, a stablecoin called Terra collapsed, resulting in a downturn in the broader crypto market.
As lawmakers consider federal rules for the digital assets sectors, it is pushing to be regulated by the Commodity Futures Trading Commission (CFTC), instead of the Securities and Exchange Commission, which is considered stricter. Already, there are three bipartisan bills in Congress that favor the CFTC as the regulator of the crypto sector.
The Treasury is yet to weigh in on the issue of the regulator of the industry.
“Treasury is trying to create the analytical basis for very strong oversight of this sector of finance,” one of The Post’s sources said. “They’re also hoping that with this kind of report, it becomes hard to have regulations that back off of tough oversight of the industry. This framework would serve as a benchmark, to say ‘Let’s be focused on these risks and not be carried away with the technology and industry promises.’”