Later today, U.S. President Joe Biden will sign a long-anticipated executive order on digital assets. Despite fears that the order may resound a regulatory clampdown on the industry, the language of the document is fairly favorable, the key focus being the coordination and consolidation of various agencies’ efforts within a unified national policy.
The order designates six key areas of the federal government’s involvement with the digital asset ecosystem — consumer and investor protection, financial stability, financial inclusion, responsible innovation, the United States’ global financial leadership and combating illicit financial activity — and directs specific agencies to lead in designated policy and enforcement domains.
The Department of the Treasury will take the lead in developing policy recommendations for mitigating both systemic and consumer risks associated with digital assets. The Financial Stability and Oversight Council is directed to assess global and domestic risks and highlight policy gaps that are should be closed. Matters of national security and combatting illicit finance will become a whole-of-government concern, with all relevant agencies “directing unprecedented focus of coordinated action” on crypto-related risks.
In addition to addressing risks, Biden’s executive order makes a nod to digital assets’ potential to expand the accessibility of financial services and contribute to maintaining the United States’ global financial leadership. Specifically, it directs the Department of Commerce to devise a framework ensuring that the U.S. is competitive in the digital asset space.
The order also directs the Treasury to produce a report on the “future of money and payment systems” and encourages the Federal Reserve to ramp up research and development of a potential U.S. central bank digital currency, or CBDC.
The executive order comes amid the U.S. government’s heightened concerns over the possibility of Russia using cryptocurrency to dodge Western sanctions in the wake of its military actions in Ukraine. Semi-informed speculations regarding the contents of the document began to circulate one day before its actual publication as Treasury Secretary Janet Yellen’s statement on the order went public prematurely, apparently by error.