Willie R. Tubbs, FISM News
The U.S. Department of the Treasury and Secretary Janet Yellen have issued the starkest indication to date that world governments will not sit idle in relation to cryptocurrency.
While the concept of cryptocurrencies is founded upon the premise that they exist beyond the control of banks and governments, Yellen’s department, at the urging of an executive order from President Joe Biden, has created a lengthy plan to coalesce world economic forces in an effort to tame the seemingly untamable.
“Technology-driven financial innovation is frequently cross-border and can impact households, businesses, and governments across the world,” a factsheet from Treasury reads. “International cooperation among public authorities, the private sector, and other stakeholders is therefore critical to maintaining high regulatory standards and a level playing field, expanding access to safe and affordable financial services, and reducing the cost of domestic and cross-border payments, including through the continued modernization of public payment systems.”
The unnamed author of the factsheet continues, “Uneven regulation, supervision, and compliance across jurisdictions creates opportunities for arbitrage and raises risks to financial stability and the protection of consumers, investors, businesses, and markets.”
In short, Treasury’s experts feel cryptocurrency is too volatile and, as it is untethered from traditional governance, must be brought into line.
To that end, Treasury has recommended an effort be made “to ensure that, with respect to the development of digital assets, America’s core democratic values are respected; consumers, investors, and businesses are protected; appropriate global financial system connectivity and platform and architecture interoperability are preserved; and the safety and soundness of the global financial system and international monetary system are maintained.”
The framework is centered on six general concepts:
- Protecting consumers, investors, and businesses globally by promoting technology and regulatory standards
- Protecting U.S. and global financial stability and mitigating systemic risk
- Mitigating illicit finance and national security risks posed by misuse of digital assets and the efforts of foreign actors
- Reinforcing U.S. leadership in the global financial system and in technological and economic competitiveness
- Promoting access to safe and affordable financial services
- Supporting technologies “that promote responsible development and use of digital assets by advancing research and relationships that increase shared learning.”
While each of these tenets can be construed as a noble cause, it remains unclear just how the U.S., or any government, can effect a change in the behavior of cryptocurrency when cryptocurrency is by its nature beyond regulation.
Indeed, the framework primarily urges U.S., G7, and G20 nations to cooperate in addressing the issue without specifying how one can achieve any of the goals the U.S. seeks. The framework is littered with urgings to work together to discuss, but painfully lacking in concrete steps to be taken.
This could be because there are precious few things a government can do when a currency exists in free form, beyond seeking to regulate the financial and/or consumer practices of the human in possession of virtual cash.