Cryptocurrencies

Biden signs order on cryptocurrency as its use explodes

Biden signs order on cryptocurrency as its use explodes

WASHINGTON (AP) — President Joe Biden signs an executive order on government oversight of cryptocurrency that urges the Federal Reserve to consider whether the central bank should step in and create its own digital currency.

The Biden administration sees the explosive popularity of cryptocurrency as a call for urgent action to examine the risks and benefits of digital assets, said a senior administration official who previewed the order on condition of anonymity.

Under the order signed Wednesday, the Treasury Department and other federal agencies are to study the impact of cryptocurrency on financial stability and national security.

The action comes as lawmakers and administration officials increasingly express concern that Russia could use cryptocurrency to avoid the impact of sanctions imposed on its banks, oligarchs and government. oil industry due to the invasion of ukraine.

Last week, Democratic Senses Elizabeth Warren, Mark Warner and Jack Reed asked the Treasury Department for information on how it intends to inhibit the use of cryptocurrency to evade sanctions.

The Biden administration argued that Russia would not be able to compensate for the loss of US and European business by turning to cryptocurrency. Officials said the Democratic president’s order had been in the works for months before Russian Vladimir Putin invaded Ukraine last month.

The executive order was widely anticipated by the financial industry, crypto traders, speculators, and lawmakers who compared the cryptocurrency market to the Wild West.

Despite the risks, the government said, surveys show that around 16% of American adults — or 40 million people — have invested in cryptocurrencies. And 43% of men aged 18-29 have invested their money in cryptocurrency.

Coinbase Global Inc., the largest cryptocurrency exchange in the United States, said the company has not seen a recent increase in sanctions-busting activity.

President Joe Biden has stepped up a crackdown on Moscow, announcing that the United States will ban Russian imports of oil, natural gas and coal. (CNN, POOL, MAXAR)

Treasury Secretary Janet Yellen said last week that “many participants in cryptocurrency networks are subject to anti-money laundering sanctions” and that the industry is “not quite the one”. where things can be evaded”.

As for the Federal Reserve getting involved in digital assets, the central bank released a paper in January that said a digital currency would “best meet the needs” of the country via a model in which banks or securities firms payment create digital accounts or wallets.

Some digital currency participants welcome the idea of ​​greater government involvement in crypto.

Adam Zarazinski, CEO of Inca Digital, a crypto data company that works for multiple federal agencies, said the order provides an opportunity to deliver “new approaches to finance.”

“The United States has an interest in developing financial innovation,” Zarazinksi said. He added that China and Russia are considering crypto and building their own currency. More than 100 countries have started or are piloting their own digital sovereign currencies, according to the White House.

Katherine Dowling, general counsel at Bitwise Asset Management, a cryptocurrency asset management firm, said an executive order that provides more legal clarity on government oversight would be “a long-term positive for crypto.” .

But Hilary Allen, professor of financial regulation at American University, cautioned against moving too fast to embrace cryptocurrencies.

“I think crypto is a place where we should be holding back on that innovation until it’s better understood,” she said. “As crypto becomes more integrated into our financial system, it creates vulnerabilities not just for those who invest in crypto, but for everyone who participates in our economy.”

On Tuesday, the Treasury Department said its financial literacy service would work to develop user-friendly materials to help people “make informed choices about digital assets.”

“History has shown that without adequate safeguards, private forms of currency can pose risks to consumers and the financial system,” said Nellie Liang, undersecretary for national finance.

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Associated Press writers Thalia Beaty in New York and Christopher Rugaber in Washington contributed to this report.

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