The long-awaited cryptocurrency regulation framework released by President Joe Biden’s Treasury Department this month attempted to outline a plan for managing the burgeoning crypto industry. Unfortunately, the department’s assessment failed to embody more substance than a mere mission statement.
While Biden’s administration appears to be taking a “whole-of-government approach” toward overseeing the decentralized finance (DeFi) sector and its ripple effects on the traditional economy, they are focused predominantly on defending against negative events — such as financial crime — and failing to facilitate positive events, such as the wealth-building opportunities that crypto offers to Americans excluded from the traditional big-banking system.
The new framework was a follow-up to Biden’s executive order in March, titled, “Ensuring Responsible Development of Digital Asset.” Officials focused predominantly on prosecuting money launderers and Ponzi schemers across jurisdictions. That may come as no surprise, considering it was developed as crypto dominoes fell over the summer months. Those included the collapse of Terraform Labs, which led to an Interpol arrest warrant for its founder, Do Kwon; the Celsius Network’s bankruptcy; and the collapse of crypto prices.
Nonetheless, these events served the healthy purpose of shaking out bad actors who were in crypto for criminal or self-interested purposes. An effective set of laws related to crypto that prevent illicit activity and promote peer-to-peer financial transactions would work wonders for crypto’s public image. The Biden framework, which is more reactive than proactive, doesn’t achieve that.
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As a nation, we don’t agree on much these days. We mostly want the United States to remain a global economic superpower, but we differ on how to do it. Stablecoins and other cryptocurrencies dismantle the power of federal currencies and allow individuals to accrue wealth independently, which is exactly why the federal government doesn’t like them.
The Biden framework literature suggests digital currency is key to securing America’s future as an economic leader. But if it grants power over crypto to the same authorities who wield power over traditional finance, the status quo isn’t going to change. Instead of establishing the U.S. dollar’s “digital twin,” the government would be better off finding a way to…
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