An executive order addressing the risks and benefits of cryptocurrency assets and related technologies underscores their current relevance within the global economy. The order seeks to develop US monetary policy to address the recent material impact of cryptocurrencies around the world.
President Biden signed the document on March 9, titled "Executive Order to Ensure Responsible Development of Digital Assets," to set out the country's position on financial stability, national security, and consumer protection.
American entrepreneurs and investors see the order as an indication of impending regulatory changes, a reflection of the growing popularity of cryptocurrencies in domestic and international markets. The Pew Research Center reports that 16% of Americans have invested, traded or used cryptocurrencies, with projections for further growth. The executive order fact sheet characterizes the cryptocurrency as having experienced โexplosive growth in recent years, surpassing a $3 trillion market capitalization last November and a $14 billion surge just five years earlier.โ
More than 100 countries have considered using cryptocurrency as their sovereign national currency, the report states, and El Salvador made the decisive decision to substitute it. colones as legal tender in September 2021. The Biden administration recognizes the opportunity to bolster American leadership in the global financial system, but not before enacting new policy, governance, and guardrail priorities that are sure to provide critical foundations for formal standards. .
The March 9 executive order identifies new US cryptocurrency policies in six key priorities:
- Protection of consumers and investors.
- Financial stability.
- illicit finances.
- United States leadership in the global financial system and economic competitiveness.
- Financial inclusion.
- Responsible innovation.
Policy recommendations for consideration are included as directives within the executive order to be addressed in light of the broader anticipated adoption of cryptocurrency. However, it is worth noting that there are two elements that specify the continued exploration of the development of a digital currency by the US Central Bank and the systemic mitigation of the transactional risks inherent in cryptocurrency, including privacy, protection of data and cybersecurity.
Consumer privacy risks and the need for safeguards to "protect against arbitrary or unlawful surveillance, which may contribute to human rights abuses" are also specifically outlined in the executive order. Additionally, ensuring that companies working with digital assets provide adequate protections for sensitive financial data is also listed as a policy goal. Cybersecurity issues spotted on major digital asset exchanges and within well-known trading platforms need to be brought under control to prevent past issues that "have resulted in billions of dollars in losses."
Although the policy directives outlined in the executive order are unlikely to change federal regulatory obligations or enforcement in the immediate future, awareness of the potential impact of cryptocurrencies is growing within the financial sector and the broader business community. Policy directions are expected, especially from agencies with regulatory discretion.
* This article first appeared on The journal record on April 1, 2022 and is reproduced with permission of the publisher.
