by Christian Datoc, White House Reporter |
| March 09, 2022 06:16 AM
President Joe Biden will sign an executive order Tuesday that moves the U.S. government one step closer toward launching a digital currency tied directly to the central banking system.
"The rise in digital assets creates an opportunity to reinforce American leadership in the global financial system and at the technological frontier, but also has substantial implications for consumer protection, financial stability, national security, and climate risk," the White House said in a statement. "The United States must maintain technological leadership in this rapidly growing space, supporting innovation while mitigating the risks for consumers, businesses, the broader financial system, and the climate."
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A number of U.S. agencies and departments have been studying the national security and financial aspects of cryptocurrency, and, according to senior administration officials, Biden's order will for the first time "bring together the expertise and authorities of the entire U.S. government to inform the holistic approach to digital assets."
"This is all about the future of the payment system in this country, the future of credit creation, and commercial banking," one official stated. "All of these issues are tied up in the question of whether to issue a digital currency and, if so, how to do so in a way that advances our strategic objectives."
The order itself directs the Departments of Commerce and Treasury and the Financial Stability Oversight Council to undergo a series of assessments and action plans to be returned between 60 to 180 days. This research, senior administration officials say, will outline the administration's policies on the following "key priorities":
- consumer and investor protection
- financial stability
- illicit finance
- U.S. leadership in the global financial system and economic competitiveness
- financial inclusion
- responsible innovation
Furthermore, the order will accelerate the research and development of a U.S. Central Bank Digital Currency already underway at the Federal Reserve, "should issuance be deemed in the national interest" by the agency reviews.
"We know the implications of potentially issuing a digital dollar are profound. They're extraordinarily wide-ranging," a senior administration official added. "This is a way to organize ourselves with urgency, so that we have a coherent and coordinated view on digital assets, and then it's articulated at the very highest level of our government."
It's worth noting that while the order explicitly directs the U.S. government to examine how blockchain is being used by criminal organizations and others to hide illicit money transfers, the administration does not currently believe that Russia is using crypto to workaround sanctions levied by the U.S. and its allies in response for President Vladimir Putin's invasion of Ukraine.
Crypto's market cap hit $3 trillion in late 2021, a massive jump from its $14 billion market cap in late 2016. Furthermore, dozens of countries, including China, have either adopted government coins or launched pilot programs exploring the viability of doing so. Meanwhile, senior administration officials estimate that nearly 20% of people in the U.S. have "invested in or traded or use cryptocurrencies."
"This is not a niche issue anymore," one senior administration official said in closing. "It's profoundly important that we have the right tools to mitigate the risks to consumers, to investors, and frankly, to the entire financial system."
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