Biden signs cryptocurrency executive order

White House directs federal agencies to assess the risks and opportunities posed by crypto

President Joe Biden giving a speech                                 
White House calls for greater research into CBDCs – Photo: Shutterstock

US President Joe Biden signed an executive order on Wednesday 9 March calling on federal agencies to assess the risks and benefits posed by cryptocurrencies. 

Cryptocurrency markets had been weighed down in the run-up to the order, with investors and traders concerned that Washington’s approach to crypto assets could be decidedly hostile. 

The White House stated that the executive order “lays out a national policy for digital assets across six key priorities: consumer and investor protection; financial stability; illicit finance; US leadership in the global financial system and economic competitiveness; financial inclusion; and responsible innovation”. 

The Biden administration called on the US Department of the Treasury to examine and develop policy recommendations on cryptocurrency and outlined its desire for regulators to “ensure sufficient oversight and safeguard against any systemic financial risks posed by digital assets”.

Attitudes towards the burgeoning sector and technology among leading US legislators can be said to be mixed. 

Texas senator Ted Cruz (R), for example, has championed the growing cryptocurrency industry and even purchased some personally. Senator Elizabeth Warren (D), meanwhile, has stressed the threat posed to monetary stability by decentralised media of exchange. Most recently drafting a bill to limit Russia’s ability to avoid sanctions via cryptocurrencies.

Nor are attitudes determined by partisan affiliation. Both candidates for the 2016 presidential election, President Donald Trump and Hillary Clinton, have previously outlined their concern that bitcoin could threaten the dollar’s position as the global reserve currency. 

The executive order called for the US Financial Stability Oversight Council to identify and mitigate economy-wide financial risks posed by digital assets and called for the mitigation of the illicit finance and national security risks posed by the illicit use of digital assets.

Call for research into CBDCs

The Biden administration also placed urgency on the research and development of a possible digital dollar. Interest in central bank digital currencies (CBDCs) has grown significantly in the past three years, spearheaded by China. 

The order directed the government to consider the technological infrastructure and capacity needs that a potential CBDC would require and encouraged the US Federal Reserve to develop a plan for how government departments can assist in the research and development. 

By 16:30 (GMT), the capitalisation of the total cryptocurrency market stood 7.6% higher in the past 24-hours at $1.85trn, buoyed by the executive order.

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