Today President Biden signed a Executive Decree address the risks and benefits of digital assets – including whether the US should establish its own central bank digital currency (CBDC). “The rise of digital assets creates an opportunity to strengthen American leadership in the global financial system and at the technology frontier, but also has substantial implications for consumer protection, financial stability, national security, and climate risk” , the Biden administration said in a statement. White House press release early this morning. The administration pointed out that “[t]he United States must maintain its technology leadership in this rapidly growing space, supporting innovation while mitigating risks to consumers, businesses, the broader financial system, and the climate. And, it must play a leading role in international engagement and global governance of digital assets in accordance with democratic values and the global competitiveness of the United States. The executive order represents the Biden administration’s first step toward regulating the cryptocurrency market, which U.S. Securities and Exchange Commission Chairman Gary Gensler has compared to the Wild West.
The executive order sets out six key priorities for government oversight of cryptocurrencies: (i) consumer and investor protection; (ii) financial stability; (iii) mitigate illicit financing; (iv) US leadership in the global financial system and economic competitiveness; (v) financial inclusion; and (iv) responsible innovation.
In particular, the decree orders:
- the Treasury Department and other federal agencies to study and recommend policies to address the implications of the growth of the digital asset industry and changes in financial markets, and to ensure sufficient oversight to protect consumers, investors and American businesses from any systemic financial risk posed by digital assets;
- the Financial Stability Oversight Council to identify any systemic financial risk posed by digital assets and develop policy recommendations to address any regulatory gaps;
- federal agencies to mitigate financial and national security risks posed by the illicit use of digital assets and to ensure that U.S. cryptocurrency laws align with those of U.S. allies and partners;
- the Department of Commerce to establish a framework to drive US competitiveness and leadership in digital asset technologies;
- the Secretary of the Treasury to produce a report on the future of monetary and payment systems, including implications for economic growth, financial growth and inclusion, national security and the extent to which technological innovation can influence this future;
- federal agencies to take concrete steps to study and support technological advances and ensure the responsible development and use of digital assets; and
- the Federal Reserve to explore the legal and economic ramifications of creating a U.S. Central Bank digital currency, also known as the “U.S. digital dollar.”
Although the executive order is a first step towards additional rules and regulations for digital assets, it does not provide any concrete direction. The ordinance, however, will likely lead to further regulation in the near future.
“The rise of digital assets creates an opportunity to strengthen American leadership in the global financial system and at the technology frontier, but also has substantial implications for consumer protection, financial stability, national security, and climate risk. “