President Joe Biden signed an executive order on Wednesday directing agencies across the federal government to coordinate efforts to assess the benefits and risks of cryptocurrency ownership and whether to create an American digital currency.
the New order it is the administration's most sweeping attempt yet to regulate a rapidly growing industry and protect consumers, investors and the American economy from cheating in a market that Securities and Exchange Commissioner Gary Gensler likens to the " Wild West".
Digital assets, including cryptocurrencies, have exploded in popularity in recent years, surpassing $3 trillion in value in November, according to a White House Fact Sheet. About 16% of American adults, or about 40 million people, have invested, traded or used crypto, the administration said.
The White House added that the order will instruct various government agencies, including the Commerce and Treasury departments, to coordinate the federal approach to regulating digital assets.
"We need a comprehensive, government-wide framework to address the emerging risks and opportunities posed by digital assets," Brian Deese, director of Biden's National Economic Council, told CNBC Wednesday morning.
"The financial innovation and technological innovation underlying this boom have many potential benefits, but the risks and costs are becoming more apparent," he added. "We need a 21st century governance structure to address this."
Bitcoin, one of the most popular cryptocurrencies in the world, saw its value in dollars jump more than 9% on Wednesday at around $42,300, according to Coin Metrics.
Many regulators and oversight bodies, including the SEC, the Commodity Futures Trading Commission, and the Financial Stability Oversight Board, have spent years trying to boost existing legal frameworks to monitor the new markets for bitcoin, ethereum, and thousands. of other tokens and assets.
But investors and lawmakers alike say such half-measures are insufficient to oversee the advent of what is becoming one of the world's largest markets and position the US as a leader in the space.
Cameron Winklevoss, chairman of crypto exchange Gemini Trust, wrote on Wednesday that Biden's executive order is a "watershed moment" for the industry.
โPaves the way for thoughtful national crypto regulation that will allow builders to build on land and ensure the US remains a leader in crypto,โ he wrote.
"It is important that various agencies (federal and state!) and Congress work closely together," Winklevoss added. "The WH recognizes the importance of broad public policy and the national interest rising above narrow jurisdictional battles to better develop a coherent and cohesive framework."
But Winklevoss is not alone in that thinking.
Clifford Cone, a partner at the law firm Clifford Chance, said in an interview that agencies have been reluctant to act as enforcers without congressional approval. Bringing various regulators, legislators and industry representatives together in one room to develop a regulatory framework, he said, is an important step.
"This is an asset class that is not going to go away. It has grown a lot and there are a lot of competing interests," Cone said Wednesday morning. "Many of us have wanted to see this development for years, because there is such a shortage of guidance."
"Yes, you can go to the SEC, and you can go to the CFTC. But the problem is that this asset class doesn't fit neatly into any of our existing securities or commodity regulatory frameworks," he said. "So, there has been hesitation within the SEC and CFTC to really move forward with responsible rules-based guidance."
The attorney, who represented VanEck when the company sought SEC approval for a bitcoin fund last year, said many on Wall Street are looking forward to more input from Congress in 2022.
Senator Cynthia Lummis hopes to fill the legislative void around digital assets.
The Wyoming Republican has been drafting for months what is expected to be a massive bill that seeks to answer fundamental but as yet unanswered questions about how digital assets will be regulated in the US.
Although the text of the bill is not yet available, those familiar with the design of the legislation say it could include guidance on what constitutes a digital "value" versus a "commodity", introduce a new family of markets laws to regulate assets and exchanges, and delineate powers to various federal regulators to enforce them.
"Currently, we simply don't have enough protection for investors in crypto finance, issuance, trading, or lending," the SEC chief said. Gensler told lawmakers in September. "Frankly, right now, it's more like the Wild West or the old 'buyer beware' world that existed before the securities laws were enacted."
