- US Treasury Department issued three publications on digital assets.
- One of the reports discussed the detailed analysis and the risks of cryptocurrencies.
- The action plan scrutinized cryptocurrencies in terms of security.
The Treasury Department of the United States issued three publications on crypto assets on Friday, following the official order of US President Joe Biden to ensure “Responsible Development of Digital Assets”.
Out of these three publications, “Crypto-Assets: Implications for Consumers, Investors, and Businesses”, was exclusively about digital assets, along with an action plan, looking forward to countering illicit crypto activities.
From the beginning, the article made a suspicious angle on the potential of blockchain technology, which was evident from the introduction itself:
The potential for blockchain technology to transform the provision of financial services, as espoused by developers and proponents, has yet to materialize.
The first half of the report was a detailed survey of crypto assets, while the second half discussed the severe risks the crypto users face. The detailed description of the risks leads to their categorization into conduct risks, operational risks, and crypto asset intermediation risks.
Conduct risks are the practices within the ecosystem, identifying the transparency issues. Operational risks include “deficiencies in information systems or internal processes, human errors, governance and management failures, or disruptions from external events”
Though the third kind of risk, the crypto asset intermediation risks, resembles operational risks, it is separately described. The third risk includes volatility and custody issues.
Interestingly, an essential part of the report is its extensive statistical information about the opportunities and risks posed by cryptocurrencies. Accordingly, the report put forward three suggestions- vigilant monitoring, interagency cooperation, and information sharing.
Moreover, the Treasury Department’s “Action Plan to Address Illicit Financing Risks of Digital Assets” scrutinized cryptocurrency in terms of national security. The plan mainly focused on seven priority actions including monitoring, and enforcement efforts.
Furthermore, the updation of the Bank Secrecy Act regulations and the increased engagement with the private sector through “the publication of official documents, discussions, and Treasury programs that enable public‐private and private‐private information sharing” were also recommended.
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