United States' President Joe Biden has signed an 'Executive Order on Ensuring Responsible Development of Digital Assets' (EO). The EO outlines a whole-government approach to understanding cryptocurrencies, their growing impact on traditional finance and offers a roadmap to implement regulation.
The EO calls upon the Treasury, Securities and Exchange Commission, the Federal Trade Commission, the Consumer Financial Protection Commission and a range of other governmental bodies to evaluate the impact cryptocurrencies have on consumers.
The industry, estimated to be worth over USD$3 trillion, has continued to grow, from El Salvador recognising Bitcoin as legal tender to Seoul, South Korea adopting a public service metaverse.
The Executive Order outlines a roadmap for the US to regulate cryptocurrencies and lists the following objectives:
Protection of consumers, investors and businesses from financial risk;
Protection of US and global financial stability through adequate regulation;
Mitigation of illicit finance and a focus on national security to prevent financial crimes such as money laundering, terrorism and proliferation financing;
Reinforce US leadership in the global financial system and in technological and economical competitiveness through the development of payment innovations and digital assets;
Promoting access to safe and affordable financial services; and
Support of technological advances that promote responsible development and use of digital assets.
Signing the EO indicates that the US Government understands the significant role cryptocurrencies and the wider industry will play in the future of global finance. This is most evident through part 4. of the EO: Policy and Actions Related to United States Central Bank Digital Currency (CBDC).
There appears to be an understanding of the benefits of digital currency such as its transparency, connectivity and transferability both domestically and internationally.
A United States CBDC may have the potential to support efficient and low-cost transactions, particularly for cross‑border funds transfers and payments, and to foster greater access to the financial system, with fewer of the risks posed by private sector-administered digital assets.
Within 180 days all the involved agencies must submit a report to the President based on a possible design of a US CBDC, any implications it may have on financial inclusion, its relationship with private sector-administered assets, the extent to which CBDCs could replace existing currencies and implications for national security.
Further, within 180 days the various relevant agencies must provide to the President reports outlining potential implications of developments and adoption of digital assets on consumers, investors, businesses and for equitable economic growth. This section is aimed to address the conditions that drive mass adoption.
Finally, within 90 days a report will be given to the President offering views on illicit finance risks posed by digital assets such as CBDCs and cryptocurrencies. Then, within 120 days, an action plan shall be coordinated to help counter these particular issues.
Following the 180 day period it seems likely that the US Government will begin the long-awaited process of regulating cryptocurrencies and the digital asset space. Within 210 days of the EO being signed, a legislative proposal is required to be provided to the President where it is expected legislation will begin to be rolled-out.
The signing of the EO marks a most significant step forward for the US in the mainstream adoption and utilisation of digital assets.