President Biden executive order - cryptocurrencies — here’s everything that’s in it

Key talking points of this article

U.S. President Joe Biden signed an executive order on Wednesday calling on the government to examine the risks and benefits of cryptocurrencies.
The Biden administration also wants to explore a digital version of the dollar.
The measures focus on six key areas:
- consumer protection, financial stability, illicit activity, U.S. competitiveness, financial inclusion and responsible innovation.

President Biden executive order was finally signed Wednesday. It calls on federal agencies to take a unified approach to regulation and oversight of digital assets, according to a White House fact sheet.

The Executive order was a long awaited directive that has had the crypto industry on edge, not least due to growing regulatory concern around the world surrounding the nascent digital asset market.

Was this leaked prematurely? The crypto market got wind of the executive order overnight after the Treasury accidentally put out a since-deleted statement calling it “historic” and releasing some of the details ahead of time.

The Biden administration is calling on the Treasury to assess and develop policy recommendations on crypto. It also wants regulators to “ensure sufficient oversight and safeguard against any systemic financial risks posed by digital assets.”

While policymakers have been keen to downplay any systemic risks resulting from crypto, there have been increasing concerns over the role played by stablecoins. These are digital tokens that are meant to be pegged to the value of existing currencies like the U.S. dollar.

Cryptocurrency Tether, the world’s largest stablecoin with $80 billion in circulation, has attracted the eye of regulators over claims its token is not sufficiently backed by dollars held in reserve. Tether says its coin is fully backed, however the makeup of its reserves includes short-term debt obligations like commercial paper, not just cash.

The government is examining the issues involved with a digital dollar and what it could mean:

The creation of a U.S. central bank digital currency
Whether Congress would need to pass laws to establish a digital currency
Any technical issues surrounding the creation of a digital currency

Illicit activity

Another key area Biden’s executive order focuses on is rooting out illegal activity in the crypto space.

The president has called for an “unprecedented focus of coordinated action” from federal agencies in mitigating illicit finance and national security risks posed by cryptocurrencies. He is also urging international collaboration on the issue.

Last month, US officials seized $3.6 billion worth of bitcoin — their biggest seizure of cryptocurrencies ever — related to the 2016 hack of crypto exchange Bitfinex.

Following Russia’s invasion of Ukraine, authorities are now also concerned about the possible use of crypto in helping sanctioned Russian individuals and companies evade the restrictions.

Proponents of crypto say it is highly difficult for funds to be laundered through digital currency, however, as all transactions are kept public on an unchangeable record-keeping system known as the blockchain.

Bottom line

President Biden’s executive order helps kick off the U.S. government’s serious analysis of cryptocurrency, an assessment that should ultimately lead to laws and regulations that establish a set of ground rules for the industry. Those rules should help create trust and acceptance in these markets, helping them to further develop.

Whompy of TAG said this: It is hard to say if there is anyone reason why the cryptocurrency markets have fluctuated so much in the last couple of weeks. But it is clear crypto is here to stay. Calling on Biden’s executive order as one of the major factors of the market fluctuation.

Protecting consumers

Protecting consumers is an important part of the directive. There have been countless stories of investors falling for crypto scams, or losing huge sums of money through cyberattacks on exchanges or users themselves.

The executive order will focus on six key areas of cryptocurrencies: