Treasury officials have urged U.S. policymakers to take action to regulate cryptocurrencies before the next crisis hits.

US lawmakers must act before the next crisis to develop standards to regulate cryptocurrencies, a US Treasury official warned on Thursday.

Graham Steele, Treasury’s undersecretary for financial institutions, said that whenever a financial crisis occurs, new regulations are adopted, such as the Dodd Frank Act and the National Bank Act. In the case of cryptocurrencies, policymakers have the ability to take action before a crisis occurs, he said.

“For crypto assets, policymakers have an opportunity to take action to adopt higher standards that support responsible innovation before a crisis occurs,” Steele said. “At the same time, it is important that any legislative proposals do not undermine the already strong regulatory base governing financial institutions and capital markets.”

Steele spoke Thursday at an event hosted by George Washington University Law School and described his time at the Treasury Department, where he oversaw cybersecurity, cryptocurrency, capital markets and more over the past two years.

Lawmakers in Washington have been working on legislation to regulate the cryptocurrency industry for some time. Interest in cryptocurrency also came from President Joe Biden, who released executives. Bespeak in 2022 “It outlines the first government-wide approach to addressing the risks and leveraging the potential benefits of digital assets and their underlying technologies.” The order addressed topics such as consumer protection, financial stability, climate risk, and national security.

The order also directs the Treasury Department to prepare several reports, including one on cryptocurrencies. The 2022 report called for federal regulators to monitor bad actors in the sector and issue guidance and rules.

“Our report notes that the United States generally has strong investor and consumer protection laws that address many of the risks posed by crypto assets,” Steele said Thursday. “Where existing laws and regulations apply, they must be vigorously enforced to ensure that cryptocurrency assets and services, and the consumers who use them, are subject to the same protections and principles as other financial products and services.”

Use cases

Steele also examined use cases for cryptocurrencies on Thursday.

“There are a lot of use cases that proponents are putting forward in ways in which these products or services could be very beneficial,” Steele said. These include cross-border payments, faster and cheaper payments, and an immutable ledger, he added.

“It feels like these are the areas that we at least say are most promising in our report,” Steele said. “So there’s less about the cryptocurrency assets themselves.”

Steele researched Dogecoin and said such an asset is speculative.

“It’s less important. I don’t even know if Dogecoin still exists or not, but it’s not about trading some of those things,” Steele said.

Davos

Meanwhile, on stage at the World Economic Forum in Davos, Switzerland, cryptocurrency executives were asked about those who say cryptocurrencies still lack major use cases.

Ripple CEO Brad Garlinghouse noted that his company is focused on solving the problem of cross-border payments, but added that there is speculation in this area.

“What we haven’t seen yet, but I think we will eventually see, is the separation of the wheat from the chaff,” Garlinghouse said, including how technology can be used to solve problems. The CEO also took a stab at Dogecoin.

“I don’t understand,” Garlinghouse said. “I don’t see any use case or purpose other than the lead actor, Elon Musk.”

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