The US Treasury official tasked the US lawmakers to expedite crypto regulation to avoid a repeat crisis. Citing past experiences in the financial crisis, the Treasury’s Assistant Secretary for Financial Institutions, Graham Steele, reminded policymakers to act on preventive regulations.
Steele cited the case of the Dodd-Frank Act adopted following the financial crisis. Its formulation and enactment arose from the need to avert plunging the economy into a financial crisis.
Prioritize Crypto Regulation to Avert Repeat Crisis
Steele observed that the Dodd-Frank Act brought stricter rules to bolster accountability and transparency, guiding credit rating agencies to safeguard investors and businesses.
Steele credits the Dodd-Frank Act as formulated following the 2007-08 financial crisis to eradicate excessive risk-taking in lending. Besides, the Treasury official hails Dodd-Frank for erecting shields against egregious business practices such as predatory lending.
Steele warned lawmakers in a Thursday, January 18 brief that nonaction from the US policymakers would plunge the industry into repeat crisis. The official restated the urgency to develop standards critical in regulating crypto before the digital assets ecosystem plunged into crisis.
Steele observed that each financial crisis led to the adoption of new regulations. The official contextualized the National Bank Act and the Dodd-Frank Act as regulations adopted post-crisis to avert repeat incidents. The US lawmakers have the opportunity and capability to act before the crisis engulfs the crypto industry.
Steele illustrated that policymakers should facilitate the adoption of higher standards in support of responsible crypto innovation. The official alerted the lawmakers against legislative proposals capable of undermining the robust regulatory foundations already applying to the capital markets and financial institutions.
Steele demanded action from the policymakers when addressing the audience at the George Washington University Law School on Thursday, January 18. He outlined the achievements realized since joining the Treasury Department in 2022, mainly refining oversight standards in cybersecurity, crypto, and capital markets.
Review of Beneficial Crypto Use Cases
Steele acknowledged that lawmakers in Washington have formulated bills seeking to rein in the crypto ecosystem in the last two years.
Steele hails President Joe Biden, who earlier in 2022 issued an executive order that created a whole-of-government focus on crypto. The executive order targets addressing the risks while harnessing benefits derived from digital assets.
The executive order targeted leveraging the benefits derived from the underlying technology. Also, it honed debates considered the foundations of the pursuit of consumer protection, national security, and financial stability.
The 2022 executive order tasked the Treasury with regular reporting on the crypto industry. Such extended the scope to obligate the federal regulatory agencies to monitor and eradicate bad actors exploiting crypto space and underlying technology.
Steele revealed on Thursday that the Treasury reports acknowledge that the US existing laws are oriented towards investor and consumer protection. Such provisions are applicable to address the vulnerabilities and risks the digital assets ecosystem poses.
Steele observed that while the existing laws and regulations are applicable today, lawmakers should prioritize vigorous enforcement to suit the diversity in crypto assets and services. Such enforcement will extend protections to consumers like those obtained in traditional financial products.
Steele reflected on the crypto use cases where the digital assets are prospectively beneficial. The Treasury official indicated that crypto assets harbor immense potential in resolving cross-border payments, immutable ledgers, and lower and quicker settlement.
Steele indicated that the areas captured in the Treasury report promise to deliver the turning point for crypto integration into mainstream finance.
Dogecoin Labeled Speculative
Steele decried that Dogecoin represented a speculative asset with its nature engulfed in uncertainty. The view garnered steam during the World Economic Forum (WEF) ongoing in Davos, Switzerland. The crypto executives hailed crypto for proving its use cases.
Ripple Labs chief executive Brad Garlinghouse hailed the crypto proof of use cases. The executive highlighted his firm’s input in addressing cross-border payments, though he admitted the existence of speculation in the crypto sector.
Garlinghouse echoed Steele’s views that crypto harbors wheat and chaff, particularly in how underlying technologies solve challenges.
The chief executive pointed to the uncertainty of Dogecoin’s nature, indicating that Tesla head Elon Musk emerges as the central actor of the memecoin.
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