Today President Joe Biden will sign an executive order outlining a new whole-of-government approach to regulating and utilizing digital assets and blockchain technology (Update: full text of executive order). The order is widely supportive of digital assets despite fears that it could have been a tight crackdown on cryptocurrencies.
Biden’s executive order directs the Federal Reserve to explore a U.S. central bank digital currency (CBDC) and provide a detailed report within six months. Legislative proposals are expected 30 days later. This includes researching the technological needs required to develop a digital dollar, as well as the economic implications and value of doing so. A CBDC for cross border payments that’s interoperable with foreign CBDCs is to be considered.
There has been no decision yet on whether a CBDC should be issued. In January, the Federal Reserve released its long-awaited consultation paper on a U.S. CBDC, taking a broadly neutral stance. Previously, Federal Reserve officials have disagreed on the topic, with Governor Lael Brainard speaking strongly in favor of a U.S. CBDC and Governor Christopher J. Waller arguing against one.
In the executive order, there is a focus on supporting innovation and economic competitiveness within the digital asset and blockchain technology industries. The U.S. seeks to harness the benefits of digital assets and sees opportunities to strengthen its position in global finance and technology. However, the order also expresses the need to take a balanced approach, mitigating risks to consumer protection, financial stability, national security, and the environment.
“President Biden’s historic executive order calls for a coordinated and comprehensive approach to digital asset policy. This approach will support responsible innovation,” said U.S. Secretary of the Treasury, Janet Yellen.
The executive order comes following concerns that wealthy Russians with ties to Putin may use cryptocurrencies to circumvent economic sanctions. For years the Russian authorities resisted cryptocurrencies, but have recently altered their stance. However, the executive order has been in the works for months, and was always planned for release this week, regardless of events in Russia.
Update: Additional details were added following the release of the full text of the executive order