White House set to propose plans for US digital asset market regulation

Recent Bloomberg speculation suggests the Biden Administration will be stepping up with a digital asset regulatory strategy this month.

The White House is speculated to be announcing a compliance strategy on cryptocurrencies like Bitcoin – currently worth more than $1 trillion globally – and other fractionalised digital assets such as NFTs (Non-Fungible Tokens) this February.

The latter, created from digital ‘collectables’ such as artwork, games, sporting moments or music clips are attracting billions from enthusiasts, traders, and speculators.

The April 2021 appointment of Wall Street and Treasury veteran Gary Gensler as the Securities and Exchange Commission (SEC) Chairman may have indicated that a stronger narrative and action was coming to fractionalised digital assets in terms of its regulatory oversight, and the Biden Administration seems to be reaffirming this. 

Gensler, a former Goldman Sachs partner, was quick to discount speculation that his own deep interest in crypto, made him sympathetic, but also pointed out that technology has previously boosted economic progress and how digital assets might do the same.

On the other hand, he told the Senate Banking Committee last September that the SEC would aim to protect investors through better regulation of new digital assets and coins – a sector the SEC Chairman often describes as a new Wild West.

Using another platform, he also said: “If somebody wants to speculate, that’s their choice, but we have a role as a nation to protect those investors against fraud.”

Bloomberg believes the Biden Administration now intends to end such debate and ‘send in the lawmen’ on digital assets, using a government-wide strategy requiring federal agencies to assess the risks and opportunities they pose and options arising.

Key questions might include the potential widespread effects of digital assets upon the US financial system and its competitiveness; illicit uses of virtual coins; should the US respond with its own crypto currency; who polices and tames this WildWest; what legislation and protection might be needed. 

This would meet long-standing financial industry concerns about a lack of clarity on US rules and guidance on digital and crypto, plus speculation that other nations, notably China, might use crypto to challenge the dollar as the world’s currency.

China’s more recent decision to block crypto trading and mining would appear to reduce the latter threat, but many market watchers remain concerned about the lack of digital protection and regulation for the consumer and investor.

Pressure is also expected to increase for private companies too, according to the Wall Street Journal in January, the SEC is preparing to force more transparency from private companies as regulators grow concerned about the lack of oversight of the private fundraising that has fuelled their rise and has the potential to create more compliance for both fractional digital assets, as well as equity crowdfunding.

Private securities and digital asset regulation will be the focus of our investment and crowdfunding webinar 'Regulated Secondary Trading in Private Securities' on Tuesday 17th May at 1 PM CT. The private securities market is constantly changing, with alternative trading systems (ATS), blockchain technology, cryptocurrency, NFT's and other forms of fintech growing in popularity and influence in recent years.

 Learn about these new and evolving elements of the private securities market and its regulatory landscape by registering for this event, along with our monthly newsletter and investment and crowdfunding webinar series.

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