‘Outdated and imbalanced’: Crypto industry, lawmakers slam Biden administration reports

Quick Take

  • Highly anticipated digital asset reports from the Biden administration “kick the can down the road” on crypto regulation, industry players said on Friday.

  • The new reports are part of the administration’s efforts to coordinate the many federal agencies and departments that cover cryptocurrency issues.

Cryptocurrency industry groups and Republican lawmakers panned a set of highly anticipated digital asset reports from the Biden administration, saying the new documents “miss the mark” and “kick the can down the road” on crypto regulation.

The Democratic administration released several reports Friday morning that examine digital assets. The move is part of an effort by the administration to unify the many federal departments and agencies that touch cryptocurrency.

The White House is “laying the groundwork for a thoughtful, comprehensive approach to mitigating digital assets’ acute risks and—where proven—harnessing their benefits,” top White House economic policy advisor Brian Deese said in a statement on Friday.

“We remain committed to working with allies, partners, and the broader digital asset community to shape the future of this ecosystem,” said Deese, the director of the National Economic Council.

But much of the digital asset community Deese referenced panned the effort, saying it fell short of providing a clear path forward on U.S. policy towards digital assets, at least for now. The reaction is unsurprising, given the administration’s call for regulators to “aggressively pursue” enforcement actions within the industry.

Officials coordinating the reports, who asked not to be directly identified during the briefing portion of a Thursday press call, said existing laws governing the financial sector were sufficient to regulate digital assets. That’s the exact opposite of the message from industry groups in Washington, though senior officials speaking to press expressed that clearer guidance should be issued around the still-nascent asset class.

The Blockchain Association, one of the largest digital asset industry groups, said the new reports lack “substantive recommendations.”

Executive Director Kristin Smith called the reports “a missed opportunity to cement U.S. crypto leadership” in a statement, and criticized them as focused too much on the risks of cryptocurrencies.

The reports were “outdated and unbalanced” in the eyes of Crypto Council for Innovation CEO Sheila Warren, who in her own statement criticized what she saw as a lack of clear policy recommendations.  

At least one company in the industry cheered the new reports.

“We are pleased that the administration is directing federal agencies to better enforce existing laws on the books,” said Ben Gray, the general counsel and chief compliance offer at Paxos Trust Company, in a statement.

Rep. Jim Himes, a crypto-friendly lawmaker who has proposed legislation for a digital dollar, also praised the reports during a telephone interview with The Block.

“I’m glad for the momentum,” said Himes. “I didn’t come away with an awful lot in the way of specific recommendations.”

On the other side of the aisle, senior Republicans were unimpressed.

Rep. Patrick McHenry, the top Republican on the House Financial Services Committee, knocked the reports for not providing more specific actions.

“Reports are not a substitute for legislative clarity,” McHenry said in a statement. “With clear rules of the road, this innovative technology can revolutionize our financial markets, modernize our payments system infrastructure, and provide new opportunities to consumers.”

McHenry’s Republican counterpart in the Senate echoed the criticism.

“While I appreciate the Biden administration’s engagement on digital assets, true regulatory clarity will require much more than just reports,” Sen. Pat Toomey (R-Pa.), the top Republican on the Senate Banking Committee, said in a statement. “What’s clearly needed is a comprehensive, tailored framework that allows these new technologies to thrive with appropriate guardrails for consumers.”

Both Toomey and McHenry also took aim at the administration’s decision not to support stablecoin legislation.

“Glaringly absent from these reports is any significant acknowledgment of the benefits that stablecoins—if issued under a clear regulatory framework—can provide to our payments system and consumers,” McHenry said.

McHenry blasted the decision to form an interagency working group to prepare for a possible digital dollar, should the Federal Reserve choose to create one.

“Republicans have consistently said the benefits of a potential U.S. CBDC must outweigh the risks—these reports fail to make the case,” said McHenry. 

A proponent of a digital dollar, Himes felt differently. But like McHenry and Toomey, he saw Congress playing a bigger role than the reports might indicate.

“I continue to believe that the real action is in the Congress right now,” he said.

Kollen Post contributed to this report. 


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About Author

Stephanie covers policy and regulation. She is based in Washington, D.C.