The Biden administration is reportedly preparing an executive order regarding cryptocurrencies, which will be issued as early as February 2022. In preparation, various federal agencies are assessing the risks and opportunities posed by digital currencies, and senior officials in the administration held a series of meetings. about it, say sources.
News of the executive order emerged a day after the Federal Reserve Board (FRB) released a discussion paper that explores the pros and cons of creating a central bank digital currency (CBDC) for banks. United States, which seeks public comment until May 20, 2022. The White House is apparently seeking to take the lead, playing a pivotal role in setting US government policy on cryptocurrencies.
Key points to remember
- The Biden administration is reportedly preparing an executive order regarding cryptocurrencies.
- One of the primary goals of the order is to develop a coordinated policy response from all agencies and departments of the US federal government.
- Maintaining US leadership in the global economy is another goal.
- The prescription can be issued as early as February 2022.
- News of the order came a day after the Fed released a report on the pros and cons of creating a US central bank digital currency (CBDC).
Federal agencies have reportedly been studying digital currencies and possible policy and regulatory responses to them for several years, but not in a concerted and coordinated manner. Meanwhile, this fragmented effort and the resulting lack of clarity about the overall direction of US policy has been a source of frustration for participants in the growing cryptocurrency market. Additionally, some observers fear that moves by other major nations to issue CBDCs could threaten the dominance of the US dollar in the global economy.
The Office of the Comptroller of the Currency (OCC), the Securities and Exchange Commission (SEC), and the Commodity Futures Trading Commission (CFTC) are among the US federal government regulators that have issued guidance letters, published informal statements, or engaged the public in rule-making efforts regarding how the emerging crypto industry should comply with federal laws and regulations. However, these efforts have not been coordinated so far.
What the executive order may contain
The executive order reportedly being drafted will address the economic, regulatory, and national security challenges posed by cryptocurrencies. It will also appeal to various federal agencies to submit reports in the second half of 2022, sources say.
A key report is expected to come from the Financial Stability Oversight Council (FSOC), whose ongoing role is to monitor risks to the US financial system. Another critical report is expected to examine the risks posed by the use of cryptocurrencies to facilitate various illegal activities.
In the meantime, the executive order is expected to assign specific roles to a wide range of federal departments and agencies in developing a comprehensive U.S. digital asset strategy. These departments and agencies range, for example, from the US State Department to the US Department of Commerce (DOC). A key objective will be to ensure that the United States remains competitive in the face of the explosive growth of digital assets around the world.
The executive order should also comment on the possibility of issuing a US CBDC. However, it will probably refrain from taking a firm position as long as the Fed continues to study this file. As noted above, the Fed’s study paper released on January 20, 2022 invites the public to submit comments until May 20, 2022. Processing and following up on these comments will likely take several additional months, at least.