U.S. Treasury Official Advocates Proactive Crypto Regulation to Avert Crises

To avert future catastrophes, U.S. Treasury Assistant Secretary for Financial Institutions Graham Steele has advocated for the creation of precise regulatory guidelines for cryptocurrencies. During an event organized by the George Washington University Law School, Steele emphasized the significance of proactive regulation and the critical time for policymakers to learn from previous financial crises.

Steele compared the current financial crisis to past financial crises that prompted the creation of important regulatory frameworks like the National Bank Act and the Dodd-Frank Act. He emphasized the possibilities for regulators to promote responsible innovation by establishing guidelines for crypto-assets prior to the emergence of problems.

“For crypto-assets, policymakers have a chance to act before a crisis to adopt higher standards that support responsible innovation,” Steele stated.

He emphasized the need for legislative initiatives to strike a careful balance, supporting rules that support current financial laws while also fostering innovation.

The Regulatory Landscape and Biden’s Executive Order

Steele’s position at the Treasury, which has responsibilities in cybersecurity and cryptocurrency, is in line with Washington’s growing emphasis on regulating cryptocurrencies. A comprehensive government strategy to digital assets was articulated in President Joe Biden’s executive order of 2022, which addressed issues with national security, financial stability, consumer protection, and climate threats.

As a result of the executive order, the Treasury produced a 2022 report that urged strict implementation of consumer and investor protection legislation as well as close observation of the cryptocurrency industry.

“Where existing laws and regulations apply, they have to be vigorously enforced so that crypto-assets and services — and the consumers who use them — are subject to the same protections and principles as other financial products and services,” noted Steele.

Steele also highlighted the positive aspects of cryptocurrencies, acknowledging their potential in cross-border payments, cost-effective settlements, and the use of immutable ledgers. The evolving regulatory landscape aims to strike a balance between fostering innovation and ensuring the protection of consumers and investors in the rapidly growing crypto space.