Cryptocurrencies

Biden orders government to study digital dollar and other cryptocurrency risks

Biden orders government to study digital dollar and other cryptocurrency risks

By Andrea Shalal and Katanga Johnson

WASHINGTON (Reuters) – U.S. President Joe Biden on Wednesday signed an executive order requiring the government to assess the risks and benefits of creating a central bank digital dollar, as well as other cryptocurrency issues, said the White House.

Bitcoin grabbed the news as the administration’s holistic and deliberative approach eased market fears of an immediate regulatory crackdown on cryptocurrencies. In midday trading, bitcoin rose 9.1% to $42,280, on track for its biggest percentage gain since Feb. 28.

Biden’s order will require the Treasury Department, Commerce Department, and other key agencies to prepare reports on “the future of money” and the role cryptocurrencies will play.

Extensive oversight of the cryptocurrency market, which topped $3 trillion in November, is essential to ensuring U.S. national security, financial stability, and competitiveness, and warding off the growing threat of cybercrime , administration officials said.

Analysts see the long-awaited executive order as a stark acknowledgment of the growing importance of cryptocurrencies and their potential implications for US and global financial systems.

“The growth of cryptocurrencies has been explosive,” Daleep Singh, deputy national security adviser for the economy, said in an interview with CNN.

Cryptocurrencies and digital assets can affect how people access banking services, consumer security and protection against volatility, and the primacy of the US dollar in the global economy, he said.

The executive order is part of an effort to promote responsible innovation but mitigates risk to consumers, investors and businesses, said National Economic Council director Brian Deese and national security adviser Jake Sullivan. the White House, in a press release.

“We recognize that past ‘financial innovation’ has too often failed to benefit working families, while exacerbating inequality and increasing systemic financial risk,” they said.

One of the main goals is to address the inefficiencies of the current US payments system and boost financial inclusion, especially of poor Americans, about 5% of whom currently do not have a bank account due to high fees, said said a manager.

Another key measure asks the government to assess the technology infrastructure needed for a possible US central bank digital currency (CBDC) – an electronic version of dollar bills in your pocket.

But it could take years to develop and introduce a “digital dollar,” administration officials warned Wednesday, noting that the Federal Reserve in January referred the matter to Congress.

Administration officials said the United States is taking great care in deciding whether — and how — to move forward with the development of a digital dollar, given the dollar’s role as the primary reserve currency. world.

“We have to be very, very deliberate about this analysis because the implications of our moving in this direction are profound for the country that issues the world’s leading reserve currency,” one of the officials said.

The order also encourages the Federal Reserve to continue its research and development efforts.

Nine countries have launched central bank digital currencies, and 16 others – including China – have begun development of such digital assets, according to the Atlantic Council https://www.atlanticcouncil.org/cbdctracker, leading some to Washington to fear that the dollar could lose some of its dominance to China.

The U.S. dollar remains supported by key fundamentals, including a commitment to transparency, the rule of law and the full independence of the Federal Reserve, the official said.

“The role of the dollar has been and will continue to be crucial to the stability of the international monetary system as a whole. Foreign central bank digital currencies and their introduction on their own do not threaten that dominance,” the official said.

Asked whether China could develop a competitive advantage if it acted sooner, an administration official said U.S. officials would monitor developments with a view to maintaining the centrality of the dollar in the global economy.

The order calls for more than a dozen reports, including from the Securities and Exchange Commission and the Consumer Financial Protection Bureau, to assess the issues raised by cryptocurrencies, including systemic risk and consumer protection.

One of the main goals is to address the inefficiencies of the current US payments system and boost financial inclusion, especially of poor Americans, about 5% of whom currently do not have a bank account due to high fees, said said a manager.

(Reporting by Andrea Shalal and Katanga Johnson; Additional reporting by Doina Chiacu; Editing by Michelle Price, Simon Cameron-Moore and Mark Porter)