President Biden is not about to take his salary in Bitcoin, and NASA does not seem ready to underwrite its return to the Moon by selling NFTs, but the Biden administration has officially put cryptocurrency policy on its to-do list.
The White House today released an executive order on “Ensuring Responsible Development of Digital Assets,” which sets out policy priorities for digital currencies—including the possibility of the US issuing one backed by the Federal Reserve—and directs an array of government agencies to start researching ways to achieve those goals.
This document, which runs 5,000-plus words, notes that “non-state issued digital assets”—meaning Bitcoin, Ethereum, and other blockchain-based cryptocurrencies–have grown in value from $14 billion in November 2016 to $3 trillion as of last November but have also raised serious concerns along the way.
Most of its policy objectives focus on reducing those potential harms: privacy violations, fraud, and theft hurting individual customers, investors, and businesses; cryptocurrency-induced systemic instability upending US and global financial markets; money laundering, ransomware payments and evading sanctions such as those now hitting Russia’s economy; and the environmental impact of the computational work needed to sustain a digital currency.
The document instructs a cast of agencies and officials, from the Commerce Department and the Director of National Intelligence to the Environmental Protection Agency, to get cracking on reports that should outline ways to address those concerns through regulation, legislation, and other means. Most of these studies are due in 180 days.
The executive order also looks to the upside of digital currencies, which it observes can make financial services and money transfers (especially across international borders) faster and more affordable but may threaten the dollar’s dominance if other countries innovate ahead of the US.
Accordingly, the order says the Biden administration “places the highest urgency” on researching a US-based central bank digital currency, or CBDC for short.
It doesn’t offer much detail on how a Federal Reserve-issued cryptocurrency might work, but in January, the Fed released a 40-page report on this possibility that suggested a “privacy-protected, intermediated, widely transferable, and identity-verified” CBDC could both preserve American financial leadership and ease such traditionally complicated transactions as international remittances and online micropayments.
Perianne Boring, CEO of the Digital Chamber of Commerce, a Washington industry group, endorsed the executive order as “a much-needed step toward putting in place coordinated and comprehensive policies that will support the growth of the US-based blockchain and digital asset markets and put in place the necessary rules of the road that protect consumers, investors, and innovators alike.”
(DisclosureDisclosure: For research purposes, I took Coinbase up on its Super Bowl offerSuper Bowl offer of $15 in free Bitcoin, which as of early this afternoon was worth all of $15.18.)
