Later today, US President Joe Biden will will draw a long-awaited executive order on digital assets. Despite fears that the injunction could put a regulatory squeeze on the industry, the language of the document is fairly favorable, with the main focus being on coordinating and consolidating the efforts of different agencies within a unified national policy.
The order identifies six key areas for the federal government’s involvement in the digital asset ecosystem – consumer and investor protection, financial stability, financial inclusion, responsible innovation, the United States’ global financial leadership and the fight against illicit financial activity. – and instructs specific bodies to provide leadership in designated policy and enforcement areas.
The Treasury Department will lead the way in developing policy recommendations for mitigating both systemic and consumer risks associated with digital assets. The Financial Stability and Oversight Council aims to assess global and domestic risks and highlight policy gaps that need to be closed. Issues of national security and fighting illicit financing will become a government-wide concern, with all relevant agencies “turning an unprecedented focus of concerted action” on crypto-related risks.
In addition to addressing risks, Biden’s executive order points to the potential of digital assets to expand access to financial services and help maintain the United States’ global financial leadership. Notably, it instructs the Department of Commerce to come up with a framework that will ensure the US is competitive in digital assets.
The order also instructs the Treasury to prepare a report on the “future of money and payment systems” and encourages the Federal Reserve to continue research and development of a potential US central bank digital currency, or CBDC, to step up.
The executive order comes amid heightened US government concerns over the possibility of Russia using cryptocurrency to evade Western sanctions in the wake of its invasion of Ukraine. Semi-informed speculation as to the contents of the document began circulating a day before it was actually published when Treasury Secretary Janet Yellen’s statement about the order went public, apparently by accident.