On March 9, the White House finally announced a much-anticipated policy directive on cryptocurrency and distributed ledger technology, with President Biden issuing an Executive Order on Ensuring the Responsible Development of Digital Assets. On the same day the order was signed, Dr. Alondra Nelson, Director of the Office of Science and Technology Policy and Deputy Assistant to the President, published a blog post describing her priorities for cryptocurrency regulation in the United States.

Dr. Alondra Nelson, who wrote the blog, has served as Director of the Office of Science and Technology Policy (OSTP) since February 17, 2022, having served from day one of the Biden Administration and played a key role in early directives such as restoring trust in scientific integrity and evidence-based decision-making, and advancing racial equity and supporting underserved communities.

Nelson's role includes supporting a cabinet-level science and technology advisory committee and serving as an advisor to the president on science, engineering, and technology aspects of the economy. This means she is likely one of the most influential people in the White House on digital asset issues. For the cryptocurrency industry, her blog helps decipher the current thinking of the White House leadership on the possibility of digital assets in the United States.

In her blog titled “ A Path Toward Responsible and Fair Digital Asset Innovation ,” she discusses three key takeaways, primarily the potential of digital assets to help unbanked populations, the cryptocurrency industry’s risk of predation on vulnerable groups, and the environmental challenges posed by certain digital assets that require high levels of computing power.

After years of demonstrating the possibilities of how digital assets can positively impact society, the cryptocurrency industry now finds itself at a critical juncture where validation of that use case will face scrutiny from top U.S. scientists and technologists.

Summary of " The Path to Responsible and Fair Digital Asset Innovation "

Nelson began by noting that one in six Americans have used cryptocurrency as payment, according to a Pew Research Center study from November 2021. Nelson described how distributed ledger technology is already being used around the world to support supply chains and support artists in new ways.

“Fully and fairly realized, digital assets can be cheaper and more efficient than traditional financial instruments, allowing a father in Pennsylvania to send money to his daughter in Honduras or a small business in Dallas to access the capital it needs to expand, with confidence and low risk,” Nelson said. While balancing these opportunities, Nelson warned that the risks of digital assets in terms of impacting consumers, communities, climate, and U.S. and global financial stability must also be considered. Even those most bullish on the cryptocurrency ecosystem would have to agree with Nelson as she described the dangers that the volatility of digital asset investments poses to those less able to withstand risk.

Nelson then listed three key areas where an executive order could provide national leadership for the United States with respect to digital assets. These areas include:

1) Promote financial equity and inclusion;

2) curbing financial plunder;

3) Understand the climate impact of digital assets.

She elaborated on each area, which was helpful and inspiring for those in the White House on their thinking regarding digital assets.

Advancing financial equity and inclusion

Nelson points out that historically, new technologies can result in the same groups benefiting while those who are not as well-off are forced to bear the highest costs.

It is acknowledged that digital assets can help close the gap for low-income and minority families; Nelson introduced that the U.S. government is committed to responsible digital asset innovation that prioritizes fairness, inclusion and other American values ​​and can be "designed" into a central bank digital currency (CBDC). Nelson's point emphasized that the high volatility of some cryptocurrencies may ultimately affect those with lower risk tolerance, which circles back to her original concern - those with lower risk tolerance will ultimately bear the highest costs.

Curbing predatory financial behavior

Senior White House administration officials do not often use cryptocurrency jargon, so for many in the industry, it certainly resonated when Nelson said digital assets offer "...new opportunities for scammers and fraudsters." Nelson explained her concerns about the risk of financial predation in the digital asset space, saying, "For example, the risks associated with cryptocurrency investments are not always immediately disclosed, which could mislead, deceive, and ultimately harm consumers and investors."

Nelson noted that one section of the order directs the U.S. Treasury to focus on potential harms to consumers, businesses and investors, which is a way for the U.S. to show leadership in this area. The second section makes clear from a policy perspective how important consumer protection is a priority for the White House.

Understanding the climate impact of digital assets

Nelson described how “certain types of digital assets currently require significant computing power, often in economies that rely on carbon-intensive energy supplies — the growth of which could create environmental challenges at a time when we need to shift to carbon-free resources to combat climate change.”

Nelson’s current focus on Bitcoin’s energy use should be a signal to the cryptocurrency community that Biden’s climate change goals are mandatory and any actions that create friction in this effort may face policy crackdowns. Nelson also noted that the White House will also explore how blockchain technology may benefit the environment, including by facilitating transactions related to responsibility for greenhouse gas emissions, water and other natural or environmental resources.

Ultimately, whether it’s access to financial services, financial predation, or energy use for specific types of distributed ledger technology, the American public has an opportunity to lead the world in technological trends as the government begins to implement the reporting required in the order. The positive side of the order and what Nelson shared with the American public is transparency in policymaking around digital assets, which may well represent the future of global finance in the coming decades.