President Joe Biden on Wednesday signed an executive order on government oversight of cryptocurrency that urges the Federal Reserve to explore whether the central bank should jump in and create its own digital currency.
The Biden administration views the explosive popularity of cryptocurrency as an opportunity to examine the risks and benefits of digital assets, said a senior administration official who previewed the order Tuesday on the condition of anonymity, terms set by the White House.
Under the executive order, Biden also has directed the Treasury Department and other federal agencies to study the impact of cryptocurrency on financial stability and national security.
The leaders shaping the crypto industry in the US received the news with caution and hope.
Jackson Mueller, Director of Policy, Government Relations at Securrency:
“Today’s Executive Order issued by the Biden Administration demonstrates that digital assets are here to stay and, as such, the Administration is now fully invested in developing an appropriate government-wide approach to the responsible development of digital assets. However, there are a few concerns raised by this Executive Order. First, is the administration unintentionally duplicating existing or ongoing work from a variety of agencies that could lead to disparate views between the Administration and independent financial regulatory authorities? Second, is the Administration setting up a clash with Congress, particularly as it relates to activating the DOJ to determine if legislative changes are necessary to launch a CBDC? Several lawmakers and Federal Reserve officials seem to think so, but the Administration could view this differently. Third, in seeking to address systemic risks from digital assets, which include stablecoins, the required Treasury-led FSOC report could provide further ammunition for the FSOC to jump ahead of Congress in setting the regulatory framework for stablecoins, which would mark a deviation from the recommendations contained in the PWG Stablecoin report and recent testimony from Under Secretary for Domestic Finance Nellie Liang.”
Tara Frater, Principal and Owner at FT Legal:
The order is, in effect, a salvo by the US declaring their intent to undertake a comprehensive investigatory analysis of the opportunities and challenges of digital assets and, in a coordinated manner, address regulatory overlap and, very likely, reduce any scope for regulatory arbitrage.
But the declaration is a validation of sorts of the significance of digital assets in our understanding of and trading in economic value; a recognition that we are most definitely in a new era; and more importantly that despite their reservations the US wishes to maintain thought leadership on policy issues.
Adrian Brink, founder of Anoma:
“The most immediately helpful actions would be for the administration to first, draft a straightforward and streamlined regulatory framework. Second, they should establish a digital USD that can be transferred between all chains in a permissionless fashion. In other words, a digital version of the USD issued by the U.S. Federal Reserve should be usable across chains (for example on Ethereum).
Governments should also support research into distributed systems and privacy. Distributed systems (or, blockchains) increase the resilience of their country’s financial infrastructure. By decentralizing the financial system, countries can achieve much higher fault tolerance and make themselves harder to attack by adversaries.
Additionally, governments should support technologies that safeguard privacy. These technologies protect individuals from foreign hostile actors and data hungry multinational corporations. The alternative is that anyone with a computer and internet could run a global financial surveillance program similar to the NSA and surveil U.S. citizens.
In summary, governments should invest in distributed systems and technologies that safeguard privacy to build more resilient systems, and provide asymmetric advantages in national defense.”
Sam Bankman-Fried – Founder FTX:
“We applaud the Biden administration for recognising the growing importance of the digital-asset space and believe today’s executive order is a significant step forward in building a strong regulated environment in the US. Innovation will always need to be coupled with safeguards and protections.”
Brad Garlinghouse, CEO Ripple Labs:
“Like many of you, I thought the Biden Admin’s EO would acknowledge crypto, but not detail specifics on next steps for regulation. However, I was pleasantly surprised & inspired by the EO acknowledging the *need* for evolution and alignment of the government’s approach to crypto.”
Jeremy Allaire, co-founder and CEO of Circle:
“For those of us in the crypto community, IMHO this E.O. should be viewed as the single biggest opportunity to engage with policymakers on the issues that matter. The proverbial doors of policymakers are WIDE OPEN, this is now a NATIONAL conversation in the U.S.”