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President Joe Biden on Wednesday signed an executive order on government oversight of cryptocurrency that urges the Federal Reserve to explore whether the central bank should jump in and create its own digital currency.
The Biden administration views the explosive popularity of cryptocurrency as an opportunity to examine the risks and benefits of digital assets, said a senior administration official who previewed the order Tuesday on the condition of anonymity, terms set by the White House.
Under the executive order, Biden also has directed the Treasury Department and other federal agencies to study the impact of cryptocurrency on financial stability and national security.
The order also directs the government to prioritize research into what infrastructure the country would need to launch a type of cryptocurrency called a “central bank digital currency” where each digital token is pegged to a set dollar value, helping to tamp down on speculation. The Fed recently issued a report saying such a currency “would best serve the needs” of the country through a model in which banks or payment firms create accounts or digital wallets.
Brian Deese and Jake Sullivan, Biden’s top economic and national security advisers, respectively, said the order establishes the first comprehensive federal digital assets strategy for the United States.
“That will help position the U.S. to keep playing a leading role in the innovation and governance of the digital assets ecosystem at home and abroad, in a way that protects consumers, is consistent with our democratic values and advances U.S. global competitiveness,” Deese and Sullivan said Wednesday in a joint statement.
Federal financial regulators have already begun taking a proactive stance towards developing a regulatory framework to deal with cryptocurrencies, but concerns remain.
The action comes as lawmakers and administration officials are increasingly voicing concern that Russia may be using cryptocurrency to avoid the impact of sanctions imposed on its banks, oligarchs and oil industry due to the invasion of Ukraine.
Last week, Democratic Sens. Elizabeth Warren, Mark Warner, and Jack Reed asked the Treasury Department to provide information on how it intends to inhibit cryptocurrency use for sanctions evasion.
The Biden administration has argued that Russia won’t be able to make up for the loss of U.S. and European business by turning to cryptocurrency. Officials said the Democratic president’s order had been in the works for months before Russia’s Vladimir Putin invaded Ukraine last month.
Daleep Singh, a deputy national security and economic adviser to Biden, told CNN on Wednesday that “crypto’s really not a workaround for our sanctions.”
Coinbase Global Inc., the largest cryptocurrency exchange in the United States, said the company had not seen a recent surge in sanctions evasion activity.
Treasury Secretary Janet Yellen said last week that “many participants in the cryptocurrency networks are subjected to anti-money laundering sanctions” and that the industry is not “completely one where things can be evaded.”
The executive order had been widely anticipated by the finance industry, crypto traders, speculators and lawmakers who have compared the cryptocurrency market to the Wild West.
Despite the risks, the government said, surveys show that roughly 16 percent of adult Americans — or 40 million people — have invested in cryptocurrencies. And 43 percent of men age 18-29 have put their money into cryptocurrency.
Cryptocurrency exchanges dominated advertising at this year’s Super Bowl, and some mortgage lenders have even begun to accept cryptocurrency in certain, limited forms.
