The White House earlier today announced the first ever, “whole-of-government” approach to supervising and regulating the crypto industry.
The U.S. President’s Executive Order will direct U.S. government agencies and regulators to work together to address the risks and harness the potential benefits of digital assets and their underlying technology.
The Fact Sheet issued by the White House stated:
“The rise in digital assets creates an opportunity to reinforce American leadership in the global financial system and at the technological frontier, but also has substantial implications for consumer protection, financial stability, national security, and climate risk.”
Digital assets, including cryptocurrencies, have seen explosive growth in recent years, surpassing a $3 trillion market cap last November and up from $14 billion just five years prior. It is estimated that around 16 percent of adult Americans – approximately 40 million people – have invested in, traded, or used cryptocurrencies.
The White House stated that the U.S. must play a leading role in international engagement and global governance of digital assets consistent with democratic values and U.S. global competitiveness.
The Executive Order lays out a national policy for digital assets across six key priorities:
- Consumer and Investor Protection;
- Financial Stability;
- Illicit Finance;
- U.S. leadership in the Global Financial System and Economic Competitiveness;
- Financial Inclusion; and
- Responsible Innovation.
President Biden has also called for measures to explore a U.S. Central Bank Digital Currency (CBDC) by placing urgency on research and development of a potential United States CBDC, should issuance be deemed in the national interest. Over 100 countries are exploring or piloting Central Bank Digital Currencies.
The Order directs the U.S. Government to assess the technological infrastructure and capacity needs for a potential U.S. CBDC that protects Americans’ interests. The Order also encourages the Federal Reserve to continue its research, development, and assessment efforts for a U.S. CBDC.
The White House stated: “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.”
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.
Per the Fact Sheet, President Biden has directed the Treasury, Financial Stability Oversight Council, Department of Commerce, Federal Reserve, and all other relevant government agencies to do more work and produce reports and frameworks on relevant aspects of cryptocurrencies.
The view from LawBEAM is that this is a welcome step from the Biden Administration. U.S. policy makers and supervisory and regulatory agencies will now need to seriously engage with the reality that crypto and digital assets represent an important new force for consumers and market infrastructures.