16% of Americans have purchased digital assets, White House says

The White House released its “The first-ever comprehensive framework for the responsible development of digital assetson Friday, stating that “millions of people around the world, including 16% American adults, have purchased digital assets” – from cryptocurrencies to non-fungible tokens, putting $3 trillion in value on the global market of digital assets in November 2021 Setting the stage in its publication, the Biden administration states that while “digital assets present potential opportunities to strengthen American leadership in the global financial system and stay at the technological frontier, they also present risks as evidenced by recent events in the crypto markets, “including the May crash of “a so-called stablecoin and subsequent wave of insolvencies that wiped out more than $600 billion in funds investors and consumers”.

Following the issuance of President Biden’s digital asset-focused Executive Order (“EO”) in March 2022, which outlined “the first whole-of-government approach to addressing the risks and harnessing the potential benefits of digital assets and their technology underlying policy,” the White House says relevant government agencies have worked together to develop policy frameworks and recommendations that advance the six key priorities identified in the EO, namely, “consumer and investor protection; promote financial stability; fight against illicit financing; US leadership in the global financial system and economic competitiveness; financial inclusion; and responsible innovation.

Together, the resulting nine reports submitted to President Biden “articulate a clear framework for the responsible development of digital assets and pave the way for further action at home and abroad,” the Commission said on Friday. White House.

Reports include: (1) U.S. Department of Commerce report, Responsible Advancement of American Competitiveness in Digital Assets; (2) the White House Office of Science and Technology Policy report, Climate and energy implications of crypto-assets in the United States; (3) another from the White House Office of Science and Technology Policy, titled, Technical Assessment of a U.S. Central Bank Digital Currency System; (4) the Department of Justice report, The Role of Law Enforcement in Detecting, Investigating, and Prosecuting Criminal Activity Related to Digital Assets; (5) Treasury Department report, The future of money and payments; (6) the report of the Treasury Department, Crypto-assets: implications for consumers, investors and businesses; 7° another from the Department of the Treasury, entitled, Action plan to tackle the risks of illicit financing of digital assets.

From a risk perspective, these reports reveal that “vendors often mislead consumers about the characteristics of digital assets and expected returns, and failure to comply with applicable laws and regulations remains widespread.” Indeed, a study found that “nearly a quarter of digital coin offerings had disclosure or transparency issues, such as plagiarized documents or false promises of guaranteed returns.” At the same time, the White House says, “Outright fraud, scams, and thefts in digital asset markets are on the rise: According to FBI statistics, reported monetary losses from digital asset scams were nearly 600% higher in 2021 than the previous year.”

In this context, and “as noted in reports released today”, the White House calls on the Consumer Financial Protection Bureau and the Federal Trade Commission (“FTC”) “as appropriate, to increase their efforts to monitor complaints consumers and to combat unfair, deceptive or abusive practices,” among other things. Additionally, the reports “encourage agencies to issue guidance and rules to address current and emerging risks in the digital asset ecosystem.” , which seems to fit perfectly with the FTC’s call, for example, for public comment on ways to modernize the guidance to bring it in line with new technological advancements – including virtual reality (“VR”), augmented reality (“AR”), games, the metaverse, and more – and how advertisers now interact with consumers. This comes in light of the agency’s plans to revise its digital advertising guide. only to include new guidelines that could take into consideration the metaverse/virtual reality.

Beware of NFTs

While most of the White House publication focuses on the financial risks that come with the widespread adoption of digital assets, such as cryptocurrencies, it makes specific – albeit brief – mention of NFTs, stating that the President “will consider whether to call on Congress to amend the Bank Secrecy Act, anti-whistleblower laws, and laws against unlicensed money transmission to explicitly apply to digital asset service providers , including digital asset exchanges and non-fungible token platforms Individual reports, on the other hand, pay significant attention to NFTs…

The Department of Justice report dives into this type of token, as well as the applicability of the Bank Secrecy Act to NFT platforms, such as OpenSea, given that these platforms “may find that this definition does not apply to their activities – and therefore are not not subject to BSA anti-money laundering and anti-terrorist financing requirements. »

The report of the Ministry of Commerce states that “in just over a decade, digital assets have become a factor in the political, economic, social and cultural discourse on the future of financial services. Terms such as crypto-asset, digital dollar, and NFT are now prominent in everyday personal finance discussions, and many Americans are increasingly asking whether digital assets should have a place in their portfolios. The agency states that “NFTs and smart contract implementations may also offer innovations in product and intellectual property verification,” and notes that “there are outstanding legal issues regarding purported intellectual property, copyright, trademark rights of NFTs”.

Treasury Department “Crypto-Assets” Report pays particular attention to NFTs, stating, among other things, that “NFTs purport to represent a claim or receipt on an asset or object that has inherently unique characteristics or differs from similar assets in a distinct way. Although NFTs are negotiable, they are not interchangeable Proponents of NFTs claim that they have “many potential applications, such as representations of collectibles (e.g., art or music), digital assets, individual identification identifiers, access keys, deeds or title deeds, or tickets to travel or events”. However, the Treasury report warns that “legal rights granted by NFTs are unclear and have been the subject of litigation”.

Among the problems with NFTs, according to the agency, are “disclosure and integrity gaps, where, for example, consumers may unknowingly purchase NFTs that may contain infringements”, the agency pointing out. the Hermes c. Rothschild Case. “The industry has seen a significant increase in the number of lawsuits filed,” he notes, “with claims related to deceptive marketing tactics or sales made under false pretenses.”