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The US government is set to tighten regulations to mitigate the growing risks associated with the crypto industry. This development comes after increased scrutiny following the collapse of FTX and Terra Luna in 2022.
In a pers conference on Jan. 27, the White House submitted a comprehensive roadmap designed to protect investors and hold bad actors to account. The roadmap highlights several steps for more effective regulation of the crypto industry.
Two Way Approach By The US Government
The US government revealed that they have spent the past two years identifying cryptocurrency risks and finding ways to mitigate them. To ensure these steps are implemented, the White House intends to use a two-pronged approach.
First, the US government has developed a framework for individuals and organizations to develop digital assets safely and responsibly. This includes addressing the risks they pose as well as highlighting bad practices in the crypto industry.
Second, the agency has been mandated to improve law enforcement and develop new regulations where necessary. Although there is an increase in public awareness programs designed to help consumers understand the risks of buying cryptocurrency.
Related Reading: US Federal Regulators Are Warning About Crypto Activity
The White House also pointed out that Congress has a major role to play in expanding regulatory powers and passing transparency laws for cryptocurrency companies. It also warned about the passage of a law that would reverse current gains and tie cryptocurrencies to the US financial system.
In addition, the government intends to commit significant resources towards digital asset research and development, and this will help the technology power digital currencies and protect investors by default.
Crypto Industry Still Shaken From FTX Collapse
The crypto industry is still recovering from the bear market resulting from the high profile collapse of several CeFi platforms. 3AC, Voyager, BlockFi and FTX were some of the top platforms to file for bankruptcy, with the quartet having over $100 billion in assets.
The nature of the FTX collapse led to increased scrutiny of the crypto industry. Congressional testimony exposed the risk-averse nature of crypto firm executives when details emerged that Sam Bankman-Fried was misusing client funds through his trading firm Alameda Research. 
The ripple effect was huge as several individuals and companies exposed to the platform suffered heavy losses, with some companies being forced to close. This event caused consternation and reactions from inside and outside the crypto space. Therefore, it is not surprising that the US government wants to tighten its grip on regulation.
Related Reading: Silvergate Crypto-Friendly Bank Suspends Dividend Payments
Months after the FTX crash, there is still increasing skepticism about the crypto industry. There has been an increase in the number of bitcoins being withdrawn from exchanges, and earlier this month crypto bank Silvergate revealed that clients withdrew nearly $8 billion from their crypto deposits.
Featured image from Pixabay, chart from TradingView.com
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