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All you need to know about Biden’s crypto executive order
The United States President, Joe Biden, signed an executive order on Wednesday calling on various government parastatals to examine the risks and benefits of cryptocurrencies in the United States.
According to the order, it focuses on six key areas which are consumer protection, financial stability, illicit activity, U.S. competitiveness, financial inclusion and responsible innovation.
Also, to note, the executive order indicates that the Biden administration wants to explore the issuance of a digital version of the United States dollar, in a bid to stay competitive with other nations who are issuing digital versions of their currencies like China and Nigeria.
The cryptocurrency market has been on edge, anticipating this executive order, which many fear would be a negative blow on cryptocurrency adoption in the United States. This is because many of the cryptocurrency users we have today are from the U.S. and the stance on the industry by the United States government will have a significant impact on the space as a whole.
The Biden Executive Order to focus on 6 key areas
According to a White House fact sheet, the executive order calls on federal agencies to take a unified approach to regulation and oversight of digital assets. Here are the six major areas the order focuses on:
1. Consumer and Investor Protection
- The Biden administration is calling on the Treasury department to assess and develop policy recommendations on crypto in relation to protecting American consumers and investors in the space. According to the fact sheet, “by directing the Department of the Treasury and other agency partners 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.”
- It further reads, “The Order also encourages regulators to ensure sufficient oversight and safeguard against any systemic financial risks posed by digital assets.”
2. Global Financial Stability and Mitigate Systemic Risk
- The executive order is also calling on government agencies to ensure there is financial stability and ensure there is enough cover to mitigate systemic risk borne out of the cryptocurrency industry. Here, the financial stability oversight council is called. It reads, “by encouraging the Financial Stability Oversight Council 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.”
3. Mitigate Against Illicit Finance and National Security Risks
- Another key area the executive order focuses on is on mitigating against illegal activity in the crypto space. The president has called for an “unprecedented focus of coordinated action” from federal agencies in mitigating illicit finance and national security risks posed by cryptocurrencies. He is also urging international collaboration on the issue.
- It reads, “by directing an unprecedented focus of coordinated action across all relevant U.S. Government agencies to mitigate these risks. It also directs agencies to work with our allies and partners to ensure international frameworks, capabilities, and partnerships are aligned and responsive to risks.”
4. Maintain U.S. Leadership in Technology and Economic Competitiveness
- The executive order focuses on giving the U.S. a competitive edge over other countries when it comes to crypto development. The Biden administration wants to ensure that the U.S. remains the number country for cryptocurrency innovation and adoption.
- It reads, “by directing the Department of Commerce 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. This framework will serve as a foundation for agencies and integrate this as a priority into their policy, research and development, and operational approaches to digital assets.”
5. Promote Equitable Access to Safe and Affordable Financial Services
- The executive order also calls on government agencies to ensure the barrier of entry into the cryptocurrency space is affordable to all and also ensures that the environment is a safe space for U.S. investors to thrive in.
- It reads, “by affirming the critical need for safe, affordable, and accessible financial services as a U.S. national interest that must inform our approach to digital asset innovation, including disparate impact risk. Such safe access is especially important for communities that have long had insufficient access to financial services.
- “The Secretary of the Treasury, working with all relevant agencies, will 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.”
6. Ensuring Responsible Development and Use of Digital Assets
- The executive order speaks on the need to focus on responsible development in the space and use of digital assets. It reads, “by directing the U.S. Government to take concrete steps to study and support technological advances in the responsible development, design, and implementation of digital asset systems while prioritizing privacy, security, combating illicit exploitation, and reducing negative climate impacts.”
Exploration of a U.S. Central Bank Digital Currency (CBDC)
The executive order also speaks on the exploration of a digital dollar. This comes at a time when China has led the charge towards CBDCs, with more and more people using smartphones to make payments and handle their finances.
It is to note that the executive order is not saying that the U.S. will establish a CBDC but calling on the government to place “urgency” on research and development of a potential CBDC. The Federal Reserve last year began work on exploring the potential issuance of a digital dollar. The central bank released a report detailing the pros and cons of such virtual money but didn’t take a position yet on whether it thinks the U.S. should issue one.
It reads, “by placing urgency on research and development of a potential United States CBDC, should issuance be deemed in the national interest. The Order directs the U.S. Government to assess the technological infrastructure and capacity needs for a potential U.S. CBDC in a manner that protects Americans’ interests.
“The Order also 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.
“This effort prioritizes U.S. participation in multi-country experimentation, and ensures U.S. leadership internationally to promote CBDC development that is consistent with U.S. priorities and democratic values.”
Bottomline
The fact sheet concluded stating, “The Administration will continue work across agencies and with Congress to establish policies that guard against risks and guide responsible innovation, with our allies and partners to develop aligned international capabilities that respond to national security risks, and with the private sector to study and support technological advances in digital assets.”
However, the executive order did not mention anything specifically about stablecoins, which has been the bone of contention for known U.S. Senators, like Elizabeth Warren and Treasury Secretary, Janet Yellen.
The news was taken with praise by all in the cryptocurrency community except Bitcoin. So far Bitcoin has lost almost $4,000 from $42,000 to traded as low as $38,230 for the day.
