On Wednesday, President Joe Biden signed an executive order concerning cryptocurrencies. The order is calling on the government to assess the associated risks and benefits of cryptocurrencies.
The highly anticipated policy comes amid reports of a divide between White House officials and Treasury Secretary Janet Yellen. The divide is reported to be part of the reason for the delay of the policy. It also comes at a time of increased global regulatory concerns around cryptocurrencies.
The signed order urges federal agencies to employ a unified approach in overseeing digital assets and regulating the space.
According to a White House fact sheet, the measures announced on Wednesday will focus on six major areas – the protection of consumers, investors and businesses; protecting the US and its ability to compete on a global scale; mitigating illicit activities; promoting financial inclusion, safe access to financial services, supporting advancement in technology and ensuring responsible development and use of digital assets; and exploring a central bank digital currency.
The measure places emphasis on protecting consumers as both in the past and in recent times, there have been cases of individual and corporate investors losing money to crypto scams or cyber hacks. The biggest hack on an exchange platform was that of Poly Network which was hacked the sum of $610 million worth of cryptocurrencies.
The signed order is, therefore, calling on the US Treasury to assess and develop recommendations on cryptocurrencies. The Biden administration wants regulators “ensure sufficient oversight and safeguard against any systemic financial risks posed by digital assets.”
Concerns have been raised about the role being played by stablecoins which are pegged to the value of existing currencies such as the US dollar. Tether for instance has $80 billion worth in circulation amid claims that the stablecoin isn’t sufficiently backed by dollars held in reserve. Tether, however, says that it is fully backed – its reserves does not only include cash. It includes short-term debt obligations like commercial paper.
Although stablecoins wasn’t part of the White House’s announcement made on Wednesday, Treasury Secretary Janet Yellen raised concerns emphasizing that regulation should be introduced for the sector.
The executive order will also be focusing on eradicating illegal activities from the crypto space. The Biden administration is not only asking federal agencies to play their part in this, it is also pushing for international support.
The government has been taking step to root out crypto crimes. It recently seized $3.6 million worth of Bitcoin related to a 2016 hack on crypto platform Bitfinex.
Cryptocurrencies can be used to launder money and promote illegal activities, so it is quite important that the executive order is focusing on this.
Cryptocurrencies like Bitcoin consume huge amounts of power for its mining process and this is one of the major reasons that some countries banned the cryptocurrency. EV company Tesla also stopped accepting Bitcoin out of environmental sustainability concerns.
The Biden administration wants crypto innovation to be “responsible’ and not have any detrimental effects on the environment.
The Biden administration wants the US to have an edge over other countries in terms of crypto development. The executive order has tasked the Department of Commerce with “establishing a framework to drive U.S. competitiveness and leadership in, and leveraging of digital asset technologies.” On Wednesday, the Blockchain Association commented that President Biden “has the opportunity to ensure America remains the global leader for technological innovation for years to come.”
The executive order also placed focus on exploring the development of a central bank digital currencies (CBDC). Countries around the world such as China and even Africa’s giant – Nigeria, have been exploring digital versions of their currencies for some time now.
The Biden administration is calling on concerned government bodies to place urgency into researching and developing a central bank digital currency for the country.
The White House fact sheet also added that “The Administration will continue work across agencies and with Congress to establish policies that guard against risks and guide responsible innovation, with our allies and partners to develop aligned international capabilities that respond to national security risks, and with the private sector to study and support technological advances in digital assets.”
Ibhadojemu Lucky Emmanuel is a graduate of Education and Economics from the University of Benin. He has a passion for tech and business and has been writing professionally for over a period of five years. He's written across various topics and segments and knew tech-business was it when he first stumbled on it. He has a great passion for music and arts, and wants to visit as many countries as he can someday.
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