White House releases comprehensive framework for development of digital assets

WASHINGTON – After months of reports and consideration the White House has released new directives and guidance on the development and regulation of digital assets.

The comprehensive federal digital assets framework seems designed to give the U.S. a guiding hand in the development of digital assets and currency nationally and internationally. This marks some early attempts by the U.S. government to navigate the cryptocurrency market while working to mitigate the risks associated with the mercurial currency system through further regulation. “Recognizing the potential benefits and risks of a U.S. Central Bank Digital Currency (CBDC), the reports encourage the Federal Reserve to continue its ongoing CBDC research, experimentation, and evaluation and call for the creation of a Treasury-led interagency working group to support the Federal Reserve’s efforts," the White House wrote in one of its releases on Sept. 16.

The cryptocurrency market has grown uncontrollably and unpredictably in the past few years. It’s lack of regulation growth of acceptance in the market has made it the target for criminals who use the currency in blackmail, money laundering, and the purchase of illicit goods among other security risks. The nature of its storage has also been a cybersecurity headache as cyber wallets are regularly broken into and looted. The White House also cites the crypto crash in May this year which resulted in the loss of at least $600 billion in crypto losses. “Digital assets pose meaningful risks for consumers, investors, and businesses,” the White house wrote. “Prices of these assets can be highly volatile: the current global market capitalization of cryptocurrencies is approximately one-third of its November 2021 peak.”

When you add in reports from the FBI that monetary losses from digital asset scams were 600% higher in 2021 than 2020 then regulation and oversight seem overdue. Perhaps more importantly this framework provides the U.S. Government with a path to modernization with its internal payment and disbursement methods. In this instance that means Federal agencies will encourage the adoption of instant payment systems to both receive money fast from the public as well as instant distribution of things like disaster funds and “Government-to-Consumer” payments.

“Together, we are laying the groundwork for a thoughtful, comprehensive approach to mitigating digital assets’ acute risks and—where proven—harnessing their benefits,” NEC Director Brian Deese and National Security Advisor Jake Sullivan said in a joint statement. “We remain committed to working with allies, partners, and the broader digital asset community to shape the future of this ecosystem.

The cryptocurrency market peaked in November 2021 at $2.9 trillion. It fell as low as $926 billion earlier this year and remains volatile and unpredictable. For the statement on the proposed framework, you can visit www.whitehouse.gov.