US Treasury asks for inputs on crypto benefits and risks

The crypto market, including bitcoin and other products, has rapidly grown in popularity in recent years, despite concerns from regulators and some policymakers

The U.S. Treasury on Tuesday said it was seeking comment on the on the risks and opportunities posed by digital assets as it seeks to prepare a report for President Joe Biden on the implications of developments such as cryptocurrencies.

The official query builds on an executive order Biden signed in March, which directed government agencies to study cryptocurrencies and other digital asset products, including central bank digital currencies.

For consumers, digital assets may present potential benefits, such as faster payments, as well as potential risks, including risks related to frauds and scams, Treasury Under Secretary for Domestic Finance Nellie Liang said in a statement.

The crypto market, including bitcoin and other products, has rapidly grown in popularity in recent years, despite concerns from regulators and some policymakers that the market lacks sufficient oversight, transparency and consumer protections.

The crypto market has been wracked by turmoil in recent weeks, with a number of high-profile firms and tokens collapsing or refusing to allow customers to withdraw funds in a bid to stabilise themselves.

The Treasury's query is far-ranging, asking for input on a host of questions, including how businesses are using cryptocurrency, where consumers may not be sufficiently protected, and how the nation's poorest could benefit or face risk from broader cryptocurrency adoption.

It says: ‘The rise in use of digital assets, and differences across communities, may also present disparate financial risk to less informed market participants or exacerbate inequities. It is critical to ensure that digital assets do not pose undue risks to consumers, investors, or businesses,’ while providing ‘safe and affordable financial services experienced by more vulnerable populations.’

The Treasury is accepting comments until Aug. 8.