United States President Joe Biden’s White House was released a statement on implementing safeguards for digital currencies.

The White House was released a statement warning about the  dangers of digital currencies, pointing to last year’s numerous collapses. I spoke to an administration official about the statement and what it means.

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‘A tough year’

Past week, the White House was released a “roadmap to mitigate cryptocurrencies’ risks,” signed by (outgoing) National Economic Council Director Brian Deese, White House Office of Science and Technology Policy Director Arati Prabhakar, Council of Economic Advisors Chair Cecilia Rouse and National Security Advisor Jake Sullivan.

The statement, on its face, isn’t a huge surprise. The industry of digital currency did in reality have a tough 2022. As I wrote in a previous edition of this newsletter, just attempting to keep up with the numerous corporations that declared bankruptcy has caused our court database charges to jump dramatically. Nevertheless, the statement sort of hints at a more cautious approach toward digital currencies than United States President Joe Biden’s executive order on cryptocurrency from last March.

The statement opened with a brief summary of “a tough year” for cryptocurrency, referencing the collapse of Luna and FTX Trading Ltd but noting there did not seem to be any contagion from the cryptocurrency industry to the broader financial ecosystem.

I spoke with a senior administration official about the statement, who informed me it was part of Team Biden’s ongoing efforts to close regulatory gaps within the cryptocurrency ecosystem.

“We’re hopeful that Congress will take strong action addressing needs in this space, but we’re continuing to push forward on the administrative front, implementing many of the [executive order] recommendations likewise as encouraging regulatory authorities … continuation their efforts to ramp up enforcement and crackdown on bad practices in the space,” the official stated, calling the approach “dual tracked.”

The official pointed to Congressional actions like Senate Banking Committee Sherrod Brown’s letter to Treasury Secretary Janet Yellen on cryptocurrency regulation, and stated the White House’s own efforts would focus more on issues like implementing the executive order’s recommendations.

Last week’s statement pointed to the White House’s previous announcements, like the framework on digital assets, and statements published by departments within the federal Government – including a joint statement from bank regulatory authorities, likewise published last week.

“ On the other hand, the events of the past year underscore that more is required. Agencies have redoubled their efforts to fight fraud, including the proliferation of false or misleading states about cryptocurrency assets being insured by the FDIC. And while the  United States is indeed a worldwide leader in fighting money laundering and terrorist financing, enforcement agencies are devoting increased resources to combatting illicit activities involving digital assets,” the statement said.

The statement’s final paragraph started with a comment on supporting responsible innovation – a line we’ve heard before – but closed with a reiteration of the authors’ concern about wanting safeguards in place.

“I think that given the events of the last fall, we were very mindful of the must implement many of the safeguards that were was known for in the FSOC reports, things like segregating customer assets, getting additional visibility into vertically integrated corporations, cracking down conflicts of interest, addressing spot market jurisdiction and that’s a long list. On the other hand, I think they’re all part and parcel of how we make sure we’ll be protecting consumers and supporting financial stability,” the official said.

Next hearings

Next week is going to be busy. There will be four bankruptcy hearings, a hearing on Sam Bankman-Fried’s bond conditions and Celsius’ bidding. Here’s what we’re watching.

Monday

• 14:30 UTC (9:30 a.m. ET): FTX Trading Ltd Bankruptcy Hearing – Appointment of Examiner
• 16:00 UTC (11:00 a.m. ET): Genesis Bankruptcy Hearing
• 19:00 UTC (2:00 p.m. ET): Celsius Network LLC Bankruptcy Hearing

Wednesday

• 15:00 UTC (10:00 p.m. ET): Celsius Network LLC Bidding Date
• 18:00 UTC (1:00 p.m. ET): FTX Trading Ltd Bankruptcy Hearing

Thursday

• 15:30 UTC (10:30 a.m. ET): Sam Bankman-Fried Bail Hearing

Biden’s rule

N/A

Outside CoinDesk:

• (Federal Reserve) The Fed rejected Custodia ( previously Avanti) Bank’s app  to become a member of the Fed Reserve System.

If you’ve got thoughts or questions on what I should discuss next week or any other feedback you’d like to share, feel free to email me at [email protected] or find me on Twitter platform @nikhileshde.

You can likewise join the group conversation on Telegram.

See ya’ll next week!

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