As the US government deliberates rules and regulation in crypto, a fresh poll found that 55% of participants said traditional regulations are more trustworthy than those of the digital assets space.
In brief
- More than half of respondents say a US CBDC would increase risks to privacy and security.
- Survey was published on the same day the White House released its first crypto framework.
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Published by the Independent Community of Bankers of America (ICBA) on Friday, the poll indicated that 71% acknowledge crypto is risky. Thirty-five percent of respondents are unaware that traditional banking laws do not apply.
Regulation remans unclear
The survey was released at the same time as the White House shared its first “comprehensive framework” for crypto. The report came around 6 months after the Biden administration released an executive order tasking government agencies to begin examining various areas of the cryptocurrency landscape in order to develop a regulatory framework.
According to the framework published on Friday, reports gathered by the federal government suggest that regulatory bodies like the SEC and CFTC should “aggressively” look to combat crypto-related crime.
Crypto-crime made up just 0.34% of all cryptocurrency transaction volume in 2020, according to blockchain data firm Chainalysis. In 2021, criminal activity accounted for just 0.15% of all blockchain transactions – down 75% from 2020 and down nearly 96% from 2019.
Some industry watchers told Blockworks on Friday that the White House’s framework was not detailed enough and leaned heavily on the message of enforcement, despite the debateable precedent.
Crypto education
The report went on to note that the May collapse of Terra’s algorithmic stablecoin and subsequent insolvencies which wiped $600 billion of investor funds underlines the need for more education.
Notably, despite the industry-wide bank run following the demise of Terra-USD, the most popular stablecoin, Tether’s USDT remained fully operational for the duration of the $10-billion withdrawal frenzy. Analysts at JPMorgan expect Tether’s importance to grow moving forward.
To help avoid such catastrophic event in the future, the Financial Literacy Education Commission (FLEC) will lead efforts to provide a bedrock for investors to understand risks, identify fraud and learn how to report misconduct.
CBDC privacy concerns
The ICBA poll also found that more than half of respondents say the establishment of a US central bank digital currency (CBDC) would increase risks for personal financial privacy and security breaches.
While the Biden administration believes a CBDC could be beneficial, more research and development is needed before regulation on a prospective digital dollar is rolled out. But according to report by Bank of America last January, a central bank digital currency release by 2030 is “inevitable”.
“Policymakers should prioritize protecting national security amid catastrophic developments in the crypto markets while collaborating on a comprehensive regulatory framework that utilizes more effective alternatives to a US CBDC — including the FedNow instant payments service,” ICBA President Rebeca Romero Rainey said in a statement.
The ICBA poll was conducted by Morning Consult last month and surveyed about 2,000 voters.
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