WASHINGTON — The White House is expected to issue an executive order this week directing several federal agencies to conduct a broad review of cryptocurrencies, including studying the creation of a U.S. digital currency, according to a person familiar with the matter.
The executive order, which the White House is expected to reveal in the coming days, will instruct the Treasury, Commerce, State, and Justice Departments, among other agencies, to study elements of the rapidly growing cryptocurrency market. currency, the person said. The agencies will have approximately three to six months to conduct a review and prepare a public report with recommendations on the federal government’s approach to digital tokens.
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Cryptocurrency is a name given to a broad group of digital assets, including widely held bitcoin and ether, thousands of lesser-known coins, and so-called stablecoins, digital assets designed to be easily exchanged for dollars. Unlike private cryptocurrencies, a US digital currency would be issued and backed by the Federal Reserve, just like US dollar bills and coins.
The move reflects the growing awareness among policy makers of cryptocurrencies as their value has skyrocketed. Since bitcoin was launched 13 years ago, the federal government has taken a piecemeal approach to the asset class, with some agencies largely avoiding it while others seek to fit it into existing regulatory frameworks designed decades earlier.
The White House will ask the Treasury Department to study the creation of a US digital currency, a possibility the Federal Reserve has already begun to assess, while the Justice Department will be tasked with considering whether Congress should pass a new legislation for a central banking digital currency. The person said the order would direct the White House Office of Science and Technology Policy to review the technical considerations of creating a US digital currency.
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The White House executive order will also direct the Treasury Department to examine the possible risks that cryptocurrencies pose to broader financial stability, as well as the illicit financing and national security risks that tokens pose, according to the person. Under the order, the Treasury Department will work with the Securities and Exchange Commission, Federal Trade Commission and Commodity Futures Trading Commission to analyze the risks they pose to consumers.
The Biden administration will examine the environmental impact of cryptocurrency mining, a process of generating revenue by using power-hungry supercomputers to solve complicated puzzles. The administration will also examine how cryptocurrencies shape economic competitiveness as well as how foreign allies approach digital assets, according to the person.
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Biden administration regulators have already begun to step up their scrutiny of digital assets. Last year, the Financial Stability Supervisory Board called stablecoins a “significant potential emerging vulnerability,” for example, and the Treasury Department pressed Congress to pass legislation regulating them.
Bloomberg previously reported that the White House was preparing an executive order on cryptocurrencies.