According to reports, officials within the Biden administration are studying “gaps” in digital currency regulations following the latest episode of market volatility, which sends a signal that new rules could soon be proposed.
People familiar with the matter have reported to The Washington Post that White House officials are studying whether digital assets such as Bitcoin (BTC) can be used to fund terrorist activities. They are also reflecting on whether retail investors should be protected from extreme price fluctuations in digital asset markets.
The brief collapse of Bitcoin below $ 30,000 last week triggered a wave of sales panic as digital asset markets launched more than $ 1 trillion in value in just ten days. Overall, the digital asset market fell by almost half between mid-April and mid-May.
A new U.S. Treasury proposal that would require digital currency holders to report all transfers over $ 10,000 to the Internal Revenue Agency was one of the many catalysts behind the decline. The Biden administration’s plan to double the IRS workforce over the next decade has also been a source of concern among investors who feel the U.S. is rapidly losing its competitiveness in tax-related matters. digital asset markets.
At present, federal lawmakers do not believe that abrupt changes in digital currency prices could threaten the stability of the overall financial market, The Washington Post said, although it is worth monitoring the risks. “They are aware of the fact that there are all sorts of risks in the abstract and things to consider, but they are still largely in a position to wait and see,” the anonymous source said.
At its peak, the digital currency market was collectively valued at more than $ 2.5 trillion, which is small compared to the overall financial system. However, as digital currencies continue to grow, what the government considers an acceptable risk may change.