U.S. President Joe Biden signed an executive order (E.O.) outlining federal efforts to research and develop specific guidelines for the use of bitcoin, alternative cryptocurrencies and a possible Federal Reserve central bank digital currency (CBDC) as the country seeks to remain at the core of the global financial system.
The order highlights how the U.S. benefits from the current world monetary order and how its best interest is to maintain that leverage. The Biden administration sees a U.S. CBDC as a possible catalyst for a stronger nation — which could help it outcompete advanced global digital payment developments from China — while it poses questions regarding alleged “risks” that more “private” cryptocurrencies like bitcoin could pose to the same efforts.
The White House fact sheet on the order notes correctly that the rise of cryptocurrency “creates an opportunity to reinforce American leadership in the global financial system and at the technological frontier.”
Treasury Secretary Janet Yellen said the effort would “promote a fairer, more inclusive, and more efficient financial system” while countering illicit finance and preventing risks to financial stability and national security.
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 directed the Treasury Department and other federal agencies to study the impact of cryptocurrency on financial stability and national security.
The US is currently lagging behind China in this respect after Beijing showcased the use of its ‘digital yuan’ at this year’s Winter Olympics.
For crypto companies, the positives outlined by Biden outweigh the negatives. Katherine Dowling, general counsel for Bitwise Asset Management, a cryptocurrency asset management firm, said an executive order that provides more legal clarity on government oversight would be “a long term positive for crypto.”
Cryptocurrency prices shot up in response to the news. Many crypto advocates feared that the White House might try to suppress the industry. Still, this effort signals that at the very least, Biden thinks crypto is a serious part of the US economy and that it might even have some potential.
But not everyone is happy about Biden’s more welcoming stance on crypto. Some believe the government shouldn’t be involved in regulating crypto at all and that Biden could still end up hamstringing the technology.
The executive order raises lots of questions, such as will stablecoins be shut down with the development of a Federal Reserve issued ‘digital dollar’?
There are no specifics as yet as the order is the first step in a comprehensive study by the US government in cryptocurrencies, NFTs and decentralised finance.