Washington, United States, 10 March 2022—President Biden will sign an Executive Order “outlining the first ever, whole-of-government approach to addressing the risks and harnessing the potential benefits of digital assets and their underlying technology”, according to the White House.
The Executive Order specifies six key priorities that will form the national policy for digital assets in the United States: consumer and investor protection; financial stability; illicit finance; U.S. leadership in the global financial system and economic competitiveness; financial inclusion; and responsible innovation.
The Executive Order introduces 6 measures as follows:
Protect U.S. Consumers, Investors, and Businesses: The Department of the Treasury and other agency partners are directed to “assess and develop policy recommendations to address the implications of the growing digital asset sector and changes in financial markets for consumers, investors, businesses, and equitable economic growth.” Also, regulators are encouraged “to ensure sufficient oversight and safeguard against any systemic financial risks posed by digital assets”.
Protect U.S. and Global Financial Stability and Mitigate Systemic Risk: the Financial Stability Oversight Council is encouraged “to identify and mitigate economy-wide (i.e., systemic) financial risks posed by digital assets and to develop appropriate policy recommendations to address any regulatory gaps”.
Mitigate the Illicit Finance and National Security Risks Posed by the Illicit Use of Digital Assets: All relevant government agencies in the US must apply an “unprecedented focus of coordinated action” in order to mitigate risks of illicit finance and national security associated with the use of digital assets. Agencies are also directed to work with allies and partners of the U.S. government in order to “ensure [that] international frameworks, capabilities, and partnerships are aligned and responsive to risks”.
Promote U.S. Leadership in Technology and Economic Competitiveness to Reinforce U.S. Leadership in the Global Financial System: The Department of Commerce is directed to “work across the U.S. Government in establishing a framework to drive U.S. competitiveness and leadership in, and leveraging of digital asset technologies”. Agencies will adopt this framework “as a foundation” and “integrate this as a priority into their policy, research and development, and operational approaches to digital assets”.
Promote Equitable Access to Safe and Affordable Financial Services: To adopt digital assets as a tool for financial inclusion especially in “communities that have long had insufficient access to financial services”. The Secretary of the Treasury is directed to work with all relevant agencies and “produce a report on the future of money and payment systems, to include implications for economic growth, financial growth and inclusion, national security, and the extent to which technological innovation may influence that future”.
Explore a U.S. Central Bank Digital Currency (CBDC): The Order “encourages the Federal Reserve to continue its research, development, and assessment efforts for a U.S. CBDC, including development of a plan for broader U.S. Government action in support of their work”. The Order places “urgency on research and development of a potential United States CBDC, should issuance be deemed in the national interest”. In any CBDC development, the White House wants to be sure that it “protects Americans’ interests” and it is “consistent with U.S. priorities and democratic values”.
The Biden administration pledges to continue to work across agencies and with Congress “to establish policies that guard against risks and guide responsible innovation” and also work “with the private sector to study and support technological advances in digital assets”.
Noticeably, contrary to the progression of thoughts in the U.S. crypto space, possible CBDC adoption appears to have overshadowed the need to support stablecoins as a public policy, rather than introduce CBDC which could compete with private innovations.
What Crypto Industry Players are Saying
As published on Bloomberg, below are some of the responses from the industry:
FTX’s Sam Bankman-Fried: “We applaud the Biden administration for recognizing the growing importance of the digital-asset space and believe today’s executive order is a significant step forward in building a strong regulated environment in the U.S. Innovation will always need to be coupled with safeguards and protections.”
Trenchev of crypto platform Nexo: “Although President Biden’s executive order leaves us short of clarity on the regulatory pathway, it’s clear his administration believes that staying out of crypto will be to the nation’s detriment, akin to missing out on building out the infrastructure of the internet in the early 1990s. The US doesn’t want to be left behind as other countries look at ways to oversee the crypto industry.”
Meltem Demirors, chief strategy officer at crypto fund-provider CoinShares: “It’s the same song and dance in Washington D.C., which is, let’s study it. The executive order was full of statements that were leading statements that were factually questionable and made certain implications about how cryptocurrencies are being used, about the purported environmental impacts. So I think it’s very clear what the bias of the administration is, but we’ll see what comes out of it,” she said. “At the end of the day, the order can only address the departments of the administration that are under the purview of the president. The SEC and CFTC are independent agencies — and therefore only mentioned a handful of times in the order as entities to be consulted — but these two regulatory bodies will likely be most important in defining the regulations that shape the future of crypto markets.”
CAB also sought to know what a digital market analyst in Nigeria thinks:
Rume Ophi, ‘Cryptopreacher’ and Digital Market Analyst: “Firstly, I must say it’s a huge publicity for cryptoassets coming from the U.S. Government is the biggest corporation globally—good or bad—and they are all about control. The Executive Order is centered on the US becoming the leader of the digital financial economy. Besides, let us not forget that the U.S. also needs to retain its power to effectively sanction any country that goes against global peace. Cryptoasset shouldn’t be used to avoid sanctions. So I think there is a national security concern here.”
Do you think the U.S. Executive Order on digital asset is a new song or just “the same song and dance”?