President Joe Biden will sign an executive order requiring federal agencies to engage in a broad review of their policies related to cryptocurrencies and other digital assets, the White House said Wednesday.
The order represents the “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 a fact sheet outlining the goals of the imitative.
The executive order focuses on six priorities for the Biden administration in the digital asset space, including consumer protection, financial stability, illicit finance, economic competitiveness, financial inclusion and innovation, and will give agencies time ranging from 60 to 120 days in order to formulate policy recommendations.
The document was drafted with input from academics, consumer protection advocates and leaders in the crypto industry, who were invited to meet with policymakers on numerous occasions, a senior administration official told reporters.
A major area of concern for the Biden administration is the risks posed by digital assets to national security in light of the increasing number of ransomware attacks aimed at U.S. government institutions, businesses and critical infrastructure.
The administration remains concerned that cryptocurrencies will enable criminals to avoid existing anti-money laundering and economic sanctions frameworks, though a senior administration official told reporters that it doesn’t believe that cryptocurrencies present a viable means to avoid recent sanctions against Russia for its invasion of Ukraine.
The order also focuses on the potential benefits of a central-bank issued digital currency, an issue that the Federal Reserve has been been studying in depth since 2020.
Last month, the Federal Reserve Bank of Boston released research, in collaboration with the Massachusetts Institute of Technology, on the technological viability of a Fed-backed digital dollar. Federal Reserve Chairman Jerome Powell has said the Fed won’t move forward with issuing a digital currency without the support of Congress.
The order also comes on the heels of a report from the President’s Working Group on Financial Markets, which brings together heads of the major federal financial regulators, that argued that Congress should pass legislation requiring issuers of stablecoins to be regulated like banks.
Stablecoins like dai
and USD coin
are a kind of digital asset that pegs their value to the U.S. dollar, and have become widely used to facilitate trading in popular cryptocurrencies like bitcoin
Their stable value makes them attractive instruments for cryptocurrency investors to store uninvested funds.
Securities and Exchange Commission Chairman Gary Gensler has also indicated that he is concerned about the lack of investor protection in cryptocurrency markets and that the industry should expect the regulator will step up its oversight particularly of cryptocurrency exchanges that have not registered with the SEC.