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The bitcoin price has plummeted from nearly $70,000 per bitcoin at the end of 2021 to around $23,000 today, helping to wipe out $2 trillion from the combined crypto market. Bitcoin is up again so far in 2023, adding 40% (topping Goldman Sach’s asset ranking for 2023) and increasing the price of other major coins ethereum, BNB
Now, the Biden administration has said that Congress must “intensify its efforts” to regulate the bitcoin and crypto markets, warning that it would be a “serious mistake” to allow the ties between cryptocurrencies and the broader financial system to deepen. amid warnings of a “global financial collapse.”
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“Over the past year, the limited exposure of traditional financial institutions to cryptocurrencies prevented the cryptocurrency turmoil from infecting the broader financial system,” four senior US officials from the Biden administration wrote in a statement, urging Congress to “ step up” efforts to regulate the cryptocurrency market after a number of crypto banknotes have been introduced.
“It would be a serious mistake to enact legislation that reverses course and deepens the ties between cryptocurrencies and the broader financial system.”
Over the past year, some of the biggest Wall Street giants have begun to venture into the world of bitcoin and crypto.
Blackrock, the world’s largest asset manager, has partnered with Bitcoin and cryptocurrency exchange Coinbase, while Goldman Sachs, JPMorgan, Wells Fargo
Fidelity, one of the world’s largest financial institutions, has drawn criticism from regulators and lawmakers for its 401k plan that allows bitcoin allocations.
“Legislation should not give major institutions such as pension funds the green light to dive headfirst into cryptocurrency markets,” White House advisers Brian Deese, director of the National Economic Council, Arati Prabhakar, director of the White House office of science and technology policy, Cecilia Rouse, chair of the Council of Economic Advisers, and national security adviser Jake Sullivan wrote.
Congress should consider expanding the powers of regulators, including the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), strengthening transparency and disclosure requirements for cryptocurrency companies, increasing funding for law enforcement and passing so-called stablecoin legislation. they advised, in the wake of President Joe Biden’s crypto executive order in March of last year and the White House’s “comprehensive” framework for crypto development in September.
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The statement has been widely welcomed by the crypto industry which is still reeling from the FTX crash and its aftermath.
“This is the first White House press statement on the subject since the events at the end of 2022,” Sheila Warren, executive director of lobby group Crypto Council for Innovation, said in an emailed statement.
“It is anchored in the public policy goals we would expect of the executive branch in the aftermath of such events: holding bad actors accountable, protecting investors, and ensuring financial stability. It also recognizes that the human behavior that leads to recent failures is neither new nor exclusive to cryptocurrencies.”
However, Warren cautioned against hasty or heavy-handed legislation.
“It’s important to have careful, evidence-based conversations and get the legislation right. We support the administration’s call for Congress to establish appropriate guardrails and transparency for those who participate in the digital asset space,” he said.
However, Binance CEO Changpeng “CZ” Zhao has warned via Twitter Last year’s $2 trillion bitcoin and crypto price collapse will put off “traditional financial players” [adoption] of [bitcoin, crypto and blockchain] technology” and “will likely cause them to fall further behind the adoption curve, which may have existential implications for them.”