Treasury Will Warn White House That Crypto Needs Major Regulations

The Treasury Department will warn the White House that cryptocurrencies could pose significant financial risks that outweigh their benefits unless the government rolls out major new regulations, Washington Post reported Thursday, citing two people familiar with the matter. From the report: Through four separate reports this month, Treasury is expected to make clear that the Biden administration's top economic officials believe crypto needs strong oversight, as lawmakers weigh new rules for the digital assets. Treasury's reports will highlight the economic danger of cryptocurrencies in several key areas, including the fraud risks they pose for investors, the two people familiar with the matter said, speaking on the condition of anonymity to discuss the reports before they're public. Treasury's assessments conclude that cryptocurrencies do not yet pose a stability risk to the broader financial system -- but that the situation could change rapidly. One of the reports will focus in particular on the financial hazards posed by stablecoins, a form of cryptocurrency that is in theory pegged to the value of the U.S. dollar, the people said. Treasury last fall called on Congress to give banking regulators new authority to police those digital tokens, but lawmakers have yet to reach agreement on how to do so. Meanwhile, the collapse of a $60 billion stablecoin project called Terra this spring helped accelerate a broader crypto market downturn that's ongoing.

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