On Friday, the Biden administration said that the US government agencies must double down on digital asset sector enforcement and identify gaps in cryptocurrency regulation. The administration cited their potential for misuse and harm despite of growing role in global finance.

The Treasury Department would also lead a group of government agencies considering a central bank digital currency. However, the White House has not endorsed the idea of a digital dollar. This action of the administration is in line with the President’s idea of ensuring responsible development of digital assets.

Treasury Secretary Janet Yellen held that innovation is one of the hallmarks of a vibrant financial system. Still, inadequate regulation can result in significant disruptions and harm to the financial system and individuals.

The White House also stated that Biden would consider asking Congress to amend the Bank Secrecy Act to apply to digital asset service providers, including cryptocurrency exchanges and platforms for non-fungible tokens (NFTs). The US President will also consider government recommendations to create a federal framework to oversee non-bank payment providers. Cryptocurrencies grew past USD 3 trillion in value last year, but the sector has stumbled in recent months as investors have pulled out of risky assets due to increasing interest rates.