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August 9, 2022

Federal Agencies Must Address the Rampant Fraud and Extreme Volatility of Digital Assets to Protect Consumers, Investors, Businesses, and Markets

WASHINGTON, D.C.— Phillip Basil, Director of Banking Policy, issued the following statement after Better Markets filed a comment letter to the Department of the Treasury regarding its request for comment related to the President’s Executive Order “Ensuring Responsible Development of Digital Assets”:

“The digital asset industry is seeking special carveouts, loopholes, and changes to our existing laws and rules specifically for their products and services based on some claimed, unproven, theoretical future benefit. However, rather than focus on these special interest pleas, these assets must be regulated to address the real, current risks and consumer protection issues that they are actually causing, as proved by the recent crypto carnage and ongoing rampant consumer fraud.

“Before moving forward with a policy agenda for digital assets, an actual, concrete goal if not public purpose or social value must be defined or at least identified, and substantial, independently verified evidence provided to support the theoretical claims that digital assets will meet that goal, provide that value, or serve that purpose. While these assets may at some point meet some of the industry’s many claims, so far their presence has not resulted in cheaper payments, more efficient products and services, or increased financial inclusion. This is especially true as compared to solutions that are being offered through the more ‘traditional’ financial system. And that is despite the fact that digital assets, and their associated products and services, currently are largely un- or under-regulated as compared to the traditional system.

“The digital asset industry has made numerous claims of being able to revolutionize, modernize, and democratize our financial system, at once making it more efficient and effective for everyone and more inclusive for those that have been un- or under-served by the current system. Several years and boom-and-bust cycles later, the industry has yet to provide any actual evidence to support these claims, but it clearly has shown the risks it poses to consumers, investors, businesses and markets.  Those risks should be the focus of policymakers and only once they are mitigated should attention turn to the unsubstantiated claims of the industry, which will then need to be tested, verified, and properly regulated.”

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Better Markets is a non-profit, non-partisan, and independent organization founded in the wake of the 2008 financial crisis to promote the public interest in the financial markets, support the financial reform of Wall Street and make our financial system work for all Americans again. Better Markets works with allies—including many in finance—to promote pro-market, pro-business and pro-growth policies that help build a stronger, safer financial system that protects and promotes Americans’ jobs, savings, retirements and more. To learn more, visit www.bettermarkets.org.

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