US President Biden to sign executive order on digital assets to ensure US leadership

On the evening of March 9, the White House official website issued a press release announcing that US President Biden will sign an executive order. The order establishes a national policy for digital assets covering six key priorities: consumer and investor protection; financial stability; illegal financing; US leadership in the global financial system and economic competitiveness; financial inclusion; and responsible innovation.

In recent years, digital assets, including cryptocurrencies, have exploded, with a market value of more than $3 trillion last November, compared with $14 billion five years ago. Surveys show that about 16% of adult Americans (about 40 million people) have invested, traded or used cryptocurrencies. More than 100 countries are exploring or piloting central bank digital currencies (CBDCs), which are digital forms of national sovereign currencies.

The rise of digital assets creates opportunities to strengthen U.S. leadership in the global financial system and at the forefront of technology, but also has significant implications for consumer protection, financial stability, national security, and climate risks. The United States must maintain technological leadership in this rapidly evolving field and support innovation while mitigating risks to consumers, businesses, the broader financial system, and the climate. And the United States must play a leading role in international engagement and global governance of digital assets consistent with democratic values ​​and U.S. global competitiveness.

That’s why today, President Biden will sign an executive order outlining the first-ever whole-of-government approach to address the risks and potential benefits of leveraging digital assets and their underlying technologies. The order establishes national policy for digital assets across six key priorities: consumer and investor protection; financial stability; illicit finance; U.S. leadership in the global financial system and economic competitiveness; financial inclusion; and responsible innovation.

Specifically, the executive order calls for the following measures:

• The order protects American consumers, investors, and businesses by directing the U.S. Treasury and other agency partners to evaluate and develop policy recommendations to address the impact of the growing digital asset industry and changes in financial markets on consumers, investors, businesses, and a fair economy. The order also encourages regulators to ensure adequate oversight and protection against any systemic financial risks posed by digital assets.

• Protect U.S. and global financial stability and reduce systemic risk by encouraging the Financial Stability Oversight Council to identify and mitigate economy-wide (i.e., systemic) financial risks posed by digital assets and develop appropriate policy recommendations to address any regulatory gaps.

• It mitigates the illicit financial and national security risks posed by the illicit use of digital assets by directing all relevant U.S. government agencies to take unprecedented coordinated actions to mitigate these risks. It also directs agencies to work with our allies and partners to ensure that international frameworks, capabilities, and partnerships are aligned and address risks.

• Promote U.S. leadership in technology and economic competitiveness to strengthen U.S. leadership in the global financial system Directs the Department of Commerce to work with the U.S. government to establish a framework to advance U.S. competitiveness and leadership in digital asset technologies and to leverage digital asset technologies. The framework will serve as a foundation for agencies to incorporate as a priority into their policies, research and development, and operational approaches to digital assets.

• Promoting equitable access to safe and affordable financial services by recognizing that the critical need for safe, affordable, and accessible financial services is a U.S. national interest that must inform our approach to digital asset innovation, including differential impact risks. This safe access is particularly important for communities that have historically been underserved. The Secretary of the Treasury will work with all relevant agencies to prepare a report on the future of money and payments systems, including implications for economic growth, financial growth and inclusion, national security, and the extent to which technological innovations may impact the future.

• Support technological advancement and ensure responsible development and use of digital assets, directing the U.S. government to take concrete steps to research and support technological advancement for the responsible development, design and implementation of digital asset systems, while prioritizing privacy, security, combating illicit exploitation, and reducing negative climate impacts.

• To explore a U.S. central bank digital currency (CBDC) through urgent research and development of a potential U.S. CBDC if issuance is deemed in the national interest. The order directs the U.S. government to assess the technical infrastructure and capacity requirements of a potential U.S. CBDC in a manner that protects the interests of Americans. The order also encourages the Federal Reserve to continue its research, development, and evaluation efforts for a U.S. CBDC, including developing a program to support broader U.S. government action. This effort prioritizes U.S. participation in multinational experiments and ensures U.S. leadership internationally to promote the development of a CBDC that is consistent with U.S. priorities and democratic values.

The U.S. Government will continue to work across agencies and with Congress to develop policies that prevent risks and guide responsible innovation, work with our allies and partners to develop a coordinated international capability to address national security risks, and work with the private sector to research and support technological advances in digital assets.