How Could Biden’s Executive Order Impact Crypto Regulations?

What is in Biden’s cryptocurrency executive order? 

The executive order lays out a national policy for digital assets across six key priorities: 

• Upholding consumer and investor protection 

• Safeguarding financial stability 

• Cracking down on illicit finance 

• Establishing economic competitiveness and US leadership in the global financial system 

• Promoting financial inclusion 

• Supporting responsible innovation

Inquiries about how digital assets could create financial accessibility and manage environmental concerns, rather than simply creating investment assets, are the order’s primary focus. The Treasury has been tasked with helping the US evolve into a digital assets leader while safeguarding US business and overall financial stability.

The executive order recognizes that mainstream digital assets adoption has arrived, and agencies need to actively begin working to integrate both digital assets and the underlying technology into the regulatory environment. Notably, the executive order demonstrates a growing confidence throughout the public sector in the future of digital assets. 

Although many policymakers historically have been hesitant to adopt and comprehend digital assets, the executive order is a signal that the Biden administration wants the US to embrace digital assets as a source of financial innovation while continuing to remain thoughtful about regulation.

Is Biden opening the door for a digital dollar? 

Of particular interest was the prominent placement of a central bank digital currency (CBDC). 

As the first item addressed, a CBDC in the US could affect payments, banking, commercial sectors, and the government as they begin to formalize more regulations for digital assets.

The development of a CBDC has been high on the radar since the Federal Reserve Board released its discussion paper regarding the pros and cons of a CBDC in January 2022.  

As stated in the executive order, sovereign currency is at the core of any government, so it’s clear the Biden administration is steering clear of the adoption of non-CBDC’s as legal tender. However, the notion of a CBDC isn’t off the table. 

What is the potential impact of Biden’s cryptocurrency executive order? 

While the executive order doesn’t have an immediate impact on digital asset reporting requirements, it does highlight the overall integration of digital assets and the underlying distributed ledger technology into the mainstream economy. 

The executive order will be a tool that helps enable widespread cryptocurrency understanding and adoption while instilling confidence that digital assets will eventually align with traditional regulatory provisions such as broker reporting. 

Over the next 180 days, the Biden administration will continue working across agencies to establish policies that guard against systemic risk and guide responsible innovation regarding digital assets. 

Takeaways

Overall, the executive order attempts to provide a solid foundation for the overall strategy of digital assets adoption.

The biggest takeaway is probably the Biden administration’s inherent acknowledgment that digital assets and distributed ledger technology have arrived in the mainstream, and the government needs to begin formally incorporating them into the regulatory regime.

The executive order’s discussion of distributed ledger technology as something other than digital assets is also particularly notable; it indicates the Biden administration understands that distributed ledger technology—which provides the backbone for cryptocurrencies and crypto assets—has use cases beyond a novel asset class and can be employed to redefine how transactions occur in day-to-day life.  

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