In a first-of-its-kind executive order issued on March 9, US President Joe Biden instructed federal agencies to coordinate their efforts in creating cryptocurrency rules.
As reported, according to a senior administration official, who previewed the directive, the Biden administration sees the exploding popularity of cryptocurrency as a demand to act quickly to examine the risks and benefits of digital assets. This news has come at a time when some experts speculated that Kremlin can use crypto to evade sanctions imposed by the West.
Last year, it was reported that, as per some people familiar with the situation, a number of federal agencies were evaluating the risks and opportunities provided by digital currencies, and senior administration officials have conducted a series of talks on the subject.
Around the same time, it was also reported that the Federal Reserve Board (FRB) had produced a discussion paper that examines the benefits and drawbacks of establishing a central bank digital currency (CBDC) in the United States, and it is open for public comment through May 20 this year.
However, the Treasury Department and other federal agencies will evaluate the impact of bitcoin on financial stability and national security as part of the order signed on March 9. It needs to be understood that the effort by the American government to regulate the crypto business focuses on consumer safety, financial stability, illicit uses, leadership in the global financial sector, financial inclusion, and responsible innovation.
The executive order, which is the first of its kind to focus solely on the rapidly rising digital asset sector, orders federal agencies to better communicate their work in the industry, but it does not specify any specific stances the administration wants agencies to take. Similarly, the directive made no mention of any new rules that crypto companies must follow.
However, the move comes as lawmakers and administration officials become increasingly concerned that Russia is utilising cryptocurrencies to evade the impact of sanctions placed on its banks, oligarchs, and oil industry as a result of the invasion of Ukraine.
The finance industry, crypto traders, speculators, and lawmakers, who have compared the cryptocurrency market to the Wild West, were all looking forward to the executive order, which was originally reported to be in the works in October 2021.
Around 16% of adult Americans — or 40 million people — have invested in cryptocurrencies, according to the government, and 43% of men between the age of 18 and 29 have invested in the digital currency.
The executive order’s focus has long been speculated to be on national security is mentioned a few times in the fact sheet describing the order. According to the reports, an administration official said the government has already started working on addressing these issues.
It was also reported that both the Department of Justice and the Federal Bureau of Investigation (FBI) have relatively new departments dedicated to crimes using cryptocurrency.
Most cryptocurrency networks are ostensibly created to make identification more difficult and to make them more decentralised. An official reportedly said to address this, the presidential order “represents a continuation” of the US’ efforts to establish financial and technology standards in other countries.
According to the fact sheet shared with reporters, the United States Commerce Department will be required to develop a framework to address concerns related to crypto and guarantee that America stays a leader in the use of digital asset technology. Additionally, other agencies should be able to use this framework to develop their own crypto policy or operational methods.
However, the Treasury Department said on March 8 that its financial literacy arm would work to develop consumer-friendly materials to help people “make informed choices about digital assets”.
The United States Under Secretary of the Treasury for Domestic Finance Nellie Liang said: “History has shown that, without adequate safeguards, forms of private money have the potential to pose risks to consumers and the financial system.”
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