Today, the U.S. President Joe Biden will sign an eagerly awaited executive order regarding digital assets. Although there are concerns that the order will result in a regulatory clampdown, the language of this document is quite favorable. The key focus of the document’s content is the coordination and consolidation between various agencies’ efforts within one national policy.
The order identifies six areas where the federal government will be involved in the digital asset ecosystem: consumer and investor protection; financial stability; financial inclusion; responsible innovation; United States’ global financial leadership and combatting illegal financial activity. It also directs agencies to take on specific policy and enforcement domains.
The Department of the Treasury will lead the development of policy recommendations to mitigate both the systemic and consumer risk associated with digital assets. The Financial Stability and Oversight Council will be responsible for assessing domestic and global risks and highlighting policy gaps that should be closed. National security and fighting illicit finance will be a major concern. All relevant agencies will “unprecedentedly focus on coordinated action” to address crypto-related risk.
Biden’s executive orders address risks and acknowledge digital assets’ potential to increase access to financial services. They also contribute to the United States’ global financial leadership. It directs the Department of Commerce, to create a framework that will ensure the U.S. remains competitive in the space of digital assets.
The Treasury is also required to prepare a report on “future money and payment system” and the Federal Reserve is encouraged to accelerate research and development of U.S. central bank digital currencies, or CBDC.
This executive order was issued amid growing concerns by the U.S. government about Russia’s use of cryptocurrency to avoid Western sanctions following its invasion of Ukraine. Semi-informed speculations about the content of the document started to circulate one morning before it was actually published. Janet Yellen, Treasury Secretary, made a statement on the order that went public prematurely.