On March 9, President Biden signed a long-awaited agreement Executive Decree outlining his administration’s cryptocurrency policy. We’ve previously blogged about the Biden administration’s task force at stablecoins and the Federal Reserve’s report on a possible US central bank digital currency (“CBDC”).
In a White House Fact sheetthe decree targets six priorities, including:
Protect consumers and investors: By encouraging regulators to provide sufficient oversight and guard against any systemic financial risk posed by digital assets.
Ensuring financial stability: By encouraging the Financial Stability Oversight Council (FSOC) to identify and mitigate economy-wide (i.e. systemic) financial risks posed by digital assets.
Mitigation of illicit financing: By directing unprecedented coordinated action among all relevant U.S. government agencies to mitigate these risks.
Promote U.S. leadership in the global financial system: By directing the Department of Commerce to work across the U.S. government to establish a framework to drive U.S. competitiveness and leadership in digital assets.
Support financial inclusion: By affirming the critical need for safe, affordable and accessible financial services.
Stimulate responsible innovation: By calling on the U.S. government to take concrete steps to explore and support technological advances in the responsible development, design, and implementation of digital asset systems.
The executive order directs the Treasury Department to evaluate and develop policy recommendations and encourages regulators to provide crypto oversight. In a statement, U.S. Treasury Secretary Janet L. Yellen said the Treasury Department would partner with interagency colleagues to “produce a report on the future of money and payment systems.” The Treasury plans to convene the FSOC to assess potential risks to the financial stability of digital assets and determine whether appropriate safeguards are in place.
The executive order will compel the administration, Congress, and federal government agencies to work toward establishing policies and regulations that will guide the continued development of digital assets. To this end, CFPB Director Rohit Chopra has issued a declaration this morning highlighting the Bureau’s commitment to “work to promote competition and innovation, while reducing the risks that digital assets could pose to our safety and security.” “Today’s executive order recognizes that the dramatic growth of digital asset markets has had profound implications for financial stability, consumer protection, national security and energy demand. . . [w]We must ensure that Americans in all financial markets are protected against error, theft or fraud.
put into practice: The executive order highlights cooperation with and the important role of the private sector in helping to explore and support technological advances in digital assets. Secretary Yellen also says Treasury actions related to the executive order will be guided, in part, by market participants. As companies in the crypto space play a vital role, they will have to contend with approaches taken by agencies such as FinCEN, SEC, CFPB and federal banking regulators. Affected companies should continue to monitor these developments to ensure that the policies and regulations that come out after the executive order are clear and consistent.
Copyright © 2022, Sheppard Mullin Richter & Hampton LLP.National Law Review, Volume XII, Number 69