Digital assets, such as cryptocurrencies, are growing at an astonishing rate. According to Time Magazine, the global cryptocurrency market is currently worth more than $3 trillion. On March 9, 2022, in response to this rapidly growing financial industry, President Biden signed an executive order calling upon U.S. Federal agencies to take a unified approach to assess and develop policy recommendations to formally regulate and monitor cryptocurrency and other digital assets.
According to the Fact Sheet issued by the White House, the executive order calls for measures to:
(1) Protect U.S. Consumers, Investors, and Businesses;
(2) Protect U.S. and Global Financial Stability and Mitigate Systemic Risk;
(3) Mitigate the Illicit Finance and National Security Risks Posed by the Illicit Use of Digital Assets;
(4) Promote U.S. Leadership in Technology and Economic Competitiveness to Reinforce U.S. Leadership in the Global Financial System;
(5) Promote Equitable Access to Safe and Affordable Financial Services;
(6) Support Technological Advances and Ensure Responsible Development and Use of Digital Assets; and
(7) Explore a U.S. Central Bank Digital Currency (CBDC).
Notably, the executive order “encourages regulators to ensure sufficient oversight and safeguard against any systemic financial risks posed by digital assets.” Additionally, the order focuses on mitigating illicit financial risks through coordinated action across all relevant U.S. Government agencies and directs these agencies to work with U.S. allies and partners to ensure international frameworks, capabilities, and partnerships are aligned and responsive to any posing risks.
This executive order likely represents a watershed moment for the cryptocurrency industry. The new policy agenda provided by the White House not only highlights upcoming policy changes but reduces uncertainty in an industry which has faced much regulatory ambiguity to date. While it is too early to analyze the long-term impacts of the executive order, it is clear that the United States Federal Government recognizes that cryptocurrency is a legitimate financial industry which requires rules and regulations specifically crafted to address the unique benefits and issues of this evolving industry. Through this executive order, the Biden Administration also makes it clear that enforcement, prosecution, and prevention of illicit activity involving cryptocurrency or other digital assets is a top priority.
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