On Wednesday, President Biden will sign an executive order directing a thorough review of the government’s approach to cryptocurrencies, to safeguard the country’s leadership position in the rapidly emerging industry while limiting risks to consumers and the financial system.
The law, which has been in the works for months, would provide some structure to the regulatory reaction to the advent of digital assets, a $1.85 trillion global market.
“Fundamentally, an American approach to digital assets encourages innovation but mitigates the risks to consumers, investors, and businesses, broader financial stability, and the environment,” said National Economic Council director Brian Deese and national security adviser Jake Sullivan in a statement.
They assured Biden that the work he has requested would be performed on schedule: “reinforce U.S. leadership in the global financial system and safeguard the long-term efficacy of critical national security tools like sanctions and anti-money laundering frameworks.”
The decision comes as Russia’s invasion of Ukraine has focused Washington’s attention on the technology’s promise as well as its risks. Tens of millions of dollars in bitcoin donations have been made to the Ukrainian government and allied groups since the crisis began. Meanwhile, some US lawmakers are afraid that Russians would use cryptocurrencies to avoid sanctions, while others believe that the asset market’s small size and the traceability of digital tokens make it an unrealistic option for targeted Russians.
The instruction calls for: an “unprecedented focus of coordinated action across all relevant U.S. Government agencies” According to a White House information sheet, the goal is to reduce the chances for illegal financial transactions that might jeopardize national security.
Under Biden’s instruction, banking regulators are tasked with assessing possible vulnerabilities cryptocurrencies pose to the financial system and the broader economy and making recommendations to address them. It requests that the Commerce Department work with other federal agencies to ensure that new rules protect the United States’ leadership in the sector. It also instructs the Treasury Department to produce a study on the “future of money and payment systems” to promote wider financial system access.
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