• Sun. Aug 14th, 2022

Biden administration opens door to digital currency and equity


WASHINGTON — The Biden administration is taking on cryptocurrency and blockchain with a new executive order intended to promote future innovation in the industry while minimizing financial risk to Americans and the global financial system.

The order, which President Joe Biden is expected to sign on Wednesday, will accelerate the research and eventual creation of the Federal Reserve’s own digital currency, push for greater support for innovation in blockchain technology, and ensure that that the new systems do not increase inequalities or financial fluctuations.

Agencies like the Departments of Commerce, State, and Treasury, as well as the Federal Reserve, have been working with or researching cryptocurrencies and blockchain technologies for years. The latest executive order, crafted in conversations with key industry players, involves the entire administration in the effort.

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The administration’s executive order is the most significant intervention the federal government has undertaken in cryptocurrency and blockchain technology so far.

The order directs federal agencies to collaborate on digital assets in six areas: consumer and investor protection; financial stability; illicit financing; US leadership in the global financial system and economic competitiveness; financial inclusion; and responsible innovation.

Pursuant to the order, the Treasury Department will issue recommendations for the financial health and protection of consumers. It will also deepen research into the future of payment systems, such as cryptocurrency.

Other departments will determine the risks and benefits of cryptocurrency and blockchain, with reports to be delivered to Biden over the next six months.

The Commerce Department is responsible for ensuring that the US financial system and the dollar remain at the heart of global finance by understanding how to leverage digital assets for this purpose.

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“Our assessment of the potential risks and benefits of digital assets must include an understanding of how our financial system does and does not meet the current needs of consumers in a fair, inclusive and efficient manner,” said a senior official from the administration that spoke. on condition of anonymity.

Current U.S. payment systems are in many ways “outdated” and can leave consumers with “slow, expensive, or completely inaccessible options,” especially for international transactions, the official said.

Still, many economists studying the space have expressed concern about the volatility of certain cryptocurrencies, non-fungible tokens, and other digital assets, as well as the threat that new financial technologies could enable illicit behavior.

Regulation of cryptocurrency and digital assets is increasingly anticipated by the industry, which has become mainstream in recent years. At least 16% of Americans have invested in, used or traded cryptocurrencies, according to a November study from the Pew Research Center.

The administration denies that the rollout of the executive order is affected by the Russian invasion of Ukraine. Senior officials are also convinced that cryptocurrencies cannot serve as an effective circumvention of the sanctions that the United States and its allies have imposed on Russian financial elites and intuitions, particularly the Russian Central Bank.

Russian banks and citizens rushed to shift their assets into cryptocurrency as the ruble sheds value under harsh Western sanctions meant to curb the Kremlin’s war machine.

Continued: Biden, White House to use executive order to add oversight to cryptocurrency: reports

Countries around the world have differing opinions on cryptocurrency and other blockchain-based so-called “Web3” technologies. The European Parliament will vote on March 14 on whether to pass a comprehensive cryptocurrency bill that would add regulations across the continent but not ban the technology.

Algeria, Bangladesh, China, Egypt, Iraq, Tunisia, Morocco, Omar and Qatar have banned the use of cryptocurrencies, considering the technology too out of control and untraceable for governments. According to the Library of Congress, 42 other countries implicitly ban some or all cryptocurrencies within their borders.

China, however, created a digital yuan and promoted its use in the country, allowing the government to monitor digital transactions on its own blockchain.

Follow Matthew Brown online @mrbrownsir.

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