Regulating the Unregulated: Where is Cryptocurrency Headed?

Kristen Salas Mationg

Associate Editor

Loyola University Chicago School of Law, JD 2024

While over 10 years have passed since Satoshi Nakamoto first introduced Bitcoin, digital currencies continue to remain unregulated by financial authorities despite a number of challenges that have plagued consumers and the government: the Silk Road, fraud, and various other financial crimes. Additionally, many consumers invest in cryptocurrencies because they are not controlled by any central government monetary policies. However, cryptocurrency investors are also at risk of their money losing its value when the market takes a tumble, as evidenced by the recent current cryptocurrency downturn. Despite these continued challenges, imposing regulations on cryptocurrencies has proven to be difficult. Until President Biden’s Executive Order, issued on March 9th of this year, the White House steered clear of recognizing digital assets as a valid form of currency. The President’s Order explicitly recognized the need for research and policy implementation across various government agencies in order to shape the way cryptocurrencies are regulated.

Exec. Order No. 14067: “Executive Order on Ensuring Responsible Development of Digital Assets”

Cryptocurrency advocates and critics have grappled with how digital assets should be regulated. While many critics would like digital assets to be quantified as securities to be regulated by the Securities and Exchange Commission (SEC), cryptocurrency firms and advocates want digital assets to be regulated by the Commodity Futures Trading Commission (CFTC). The CFTC regulates the derivatives market and does not have the same disclosure and compliance requirements that the SEC imposes on securities such as stocks and bonds.

While the President’s Order did not exactly address how digital assets should be quantified and regulated, the Order recognized the importance of blockchain technology and its impact on consumers.

Specifically, the Order’s first objective – protecting United States consumers, investors, and businesses – proves that the White House recognizes the exceptional growth of the cryptocurrency market and the need to understand the current laws that are in place to develop and implement future policies. The President explicitly states that the hacking of exchanges and trading platforms has resulted in billions of dollars in losses for United States consumers, investors, and businesses. In putting this objective first, the President prioritizes domestic protection against hackers, requiring the implementation of regulations.

Additionally, the Order’s third objective – mitigating illicit finance and national security risks – calls for the standardized administration of protective measures to ensure the privacy and security of market participants. Though digital assets are decentralized, and payments are peer-to-peer, the consequences of illicit transactions are too substantial for the government not to take action. Therefore, the President clearly believes that it is in the national interest for government authorities to take steps to mitigate illicit transactions.

The comprehensive framework and its impact of on national policy

The President’s Order set hard deadlines for 18 government agencies to provide reports to the President that laid the grounds for future policies. The interagency process outlined in the Order ensured that each of the federal agencies addressed – the Secretary of State, the Secretary of Treasury, the Environmental Protection Agency, the Director of National Intelligence, and more – participated in and coordinated research initiatives to shed light on next steps the White House would need to take to achieve the Order’s objectives.

As a result of the President’s Order, various government agencies submitted reports to the White House, collectively calling for measures to balance incentivizing innovation in the digital asset space and the need to mitigate downside risks of digital assets. The White House’s comprehensive framework incorporates each of these reports to achieve the goals set forth in the President’s Executive Order, with an emphasis on protecting U.S. consumers and businesses, preventing financial crime, and maintaining the country’s position as a global financial leader.

Notably, the White House announced that it will empower the SEC and the CFTC to “aggressively pursue investigations” in the digital asset space while considering whether to raise penalties for unlicensed money transferring with the hope of more effectively fighting the illicit use of digital assets. The White House also hopes to further protect consumers by safeguarding financial stability; specifically, the Treasury will work to identify and mitigate cyber vulnerabilities and will work with international organizations to identify, track, and analyze emerging strategic risks related to digital asset marks. Importantly, the framework also encourages the Federal Reserve to continue its efforts to research a U.S. central bank digital currency, or CBDC, which “should protect consumers, promote economic growth, improve payment systems, provide interoperability with other platforms, advance financial inclusion, protect national security, respect human rights, and align with democratic values”. The White House and the Federal Reserve believe that an implementation of a digital U.S. currency is safer because the currency would be the liability of the central bank.


While policies regulating digital assets remain unclear, the President’s Executive Order and the White House’s subsequent comprehensive framework collectively endorse the use of digital assets as a legitimate form of currency. Further, a proposed senate bill lays out a framework for potential oversight of digital assets by the CFTC. It is the hope of both the White House and Senate to combat crime and protect consumers in the digital asset market, and market participants can soon expect new regulations in order for the Administration and Capitol Hill to achieve these goals.

Though many consumers are attracted to cryptocurrency because of its unregulated nature, defining which agency is responsible for overseeing digital assets and subsequent regulations should be welcomed. Far too many consumers have been victims of cryptocurrency theft and scams, cryptocurrency mining poses a significant environmental risk, and the volatility of digital assets generally has left many skeptical to invest. New regulations can help to combat many of these issues by providing stability in the market and requiring compliance with regulators, allowing for more consumer protection to make the market safer and more inclusive for all types of consumers.