The US government is ready to tighten regulations to mitigate the growing risks associated with the crypto industry. This development comes after increased scrutiny following the collapse of FTX and Terra Luna in 2022.
in a Press release On January 27, the White House unveiled a comprehensive roadmap designed to protect investors and hold bad actors accountable. The roadmap highlighted several measures for more effective regulations in the crypto industry.
A two-pronged approach by the US government
The US government revealed that it had spent the last two years identifying the risks of cryptocurrencies and finding ways to mitigate them. To ensure these measures are implemented, the White House intends to use a two-pronged approach.
First, the US government has developed a framework for individuals and organizations to develop digital assets in a secure and responsible manner. This includes addressing the risks they pose and highlighting bad practices within the crypto industry.
Second, agencies have been mandated to increase enforcement and develop new regulations where necessary. While there is an increase in public awareness programs designed to help consumers understand the risks of buying cryptocurrency.
Related reading: US Federal Regulators Warn About Crypto Activities
The White House also noted that Congress had an important role in expanding the powers of regulators and passing transparency laws for cryptocurrency companies. He also warned of passing legislation that would reverse current gains and link cryptocurrency to the US financial system.
Furthermore, the government intends to commit significant resources to digital asset research and development, and this would help technologies power digital currencies and protect investors from default.
The cryptocurrency industry continues to reel from the collapse of FTX
The crypto industry is still reeling from bear markets resulting from the high-profile crashes of various CeFi platforms. 3AC, Voyager, BlockFi, and FTX were among the major platforms to file for bankruptcy, with the quartet holding more than $100 billion in assets.
The nature of the FTX crash prompted increased scrutiny from the crypto industry. Congressional testimony exposed the risk-averse nature of crypto firm executives when details emerged that Sam Bankman-Fried misused client funds through his trading firm Alameda Research.
The ripple effect was massive as various individuals and companies exposed to the platform suffered huge losses, with some companies being forced out of business. These events caused concerns and reactions inside and outside of the crypto space. It is therefore not surprising that the US government is looking to tighten its grip on regulations.
Related reading: Crypto-friendly bank Silvergate suspends dividend payments
Months after the FTX crash, there is still more skepticism about the cryptocurrency industry. There is an increase in the number of bitcoins withdrawn from exchanges, and earlier this month. crypto bank, Silvergate revealed that customers withdrew nearly $8 billion of their crypto deposits.
Featured Image from Pixabay, Chart from TradingView.com
