President Joe Biden could possibly sign a long-awaited executive order this week asking the Justice Department, Treasury Department, and other agencies to investigate the legal and economic implications of creating a digital currency issued by the US central bank. This might be the first real step by the White House toward regulating the digital currency. The presidential order is likely to specify what government institutions, including the Treasury Department, must undertake in order to implement cryptocurrency laws and regulations. It is also likely to request the State Department ensure that US cryptocurrency rules are consistent with those of US partners, as well as to charge the Financial Stability Oversight Council with investigating any unlawful financial issues.
The executive order would allow Biden to direct the Justice Department to investigate whether new legislation is required to create a new currency. Other departments, like the Consumer Financial Protection Bureau and the Federal Trade Commission, will investigate the potential impact on consumers. Other authorities will look at the impact of cryptocurrency on competitiveness, infrastructural requirements, Bitcoin mining’s environmental impact, and so on. To summarise, the directive will not require immediate action, but it would need authorities to report back after investigating the dangers linked with crypto assets.
The importance of cryptocurrencies in our daily lives as well as in political concerns is undoubtedly increasing. Millions of dollars in cryptocurrency donations flowed in after the Ukrainian government tweeted a call for aid. Simultaneously, there are rising concerns about Russia’s use of cryptocurrency as a means of evading sanctions.
“We will continue to look at how the sanctions work and evaluate whether or not there are liquid leakages and we have the possibility to address them. I often hear cryptocurrency mentioned and that is a channel to be watched,” Treasury Secretary Janet Yellen said last week.
The Treasury Department’s Financial Crimes Enforcement Network issued an advisory on Monday, warning financial institutions to be “vigilant” about any attempts to circumvent sanctions related to Russia’s war in Ukraine.
Then there’s the big meltdown, which sent currencies down by 10% or more, harming even the most important enterprises. There are also growing concerns about the effects of crypto mining on the environment. Several firms, including Elon Musk’s Tesla, Mark Cuban’s NBA franchise Dallas Mavericks, and movie theatre chain AMC Theatres, have begun to accept bitcoins for payment.
Yellen also stated that the Department of the Treasury will continue to collaborate with the Financial Stability Oversight Council, which met last year to review stablecoins. Last December, the committee released a paper that identified stablecoins and decentralized finance as two risk-prone areas for US financial stability.
Other initiatives to address crypto legislation have been handled by the Treasury Department, including a study on stablecoins by the President’s Working Group for Financial Markets. The report, which was released last year, requested that Congress approve legislation granting federal bank regulators express supervision authority over the stablecoin industry.
Meanwhile, the USA is also concerned that cryptocurrencies also pose threat to its national security. For instance, it’s been suggested that China manipulates cryptocurrency prices through regulatory acts to obtain a competitive advantage in adopting the digital yuan as part of its Belt and Road Initiative. North Korea is also accused of stealing cryptocurrencies to fund its nuclear weapons program.
The announcement of this executive order comes shortly after the Federal Reserve Board (FRB) released a discussion paper in January examining the benefits and drawbacks of adopting a central bank digital currency (CBDC) for the United States, which is open for public comment through May 20, 2022.
Once signed by Biden, the executive order will establish a 180-day timeframe for federal departments to submit findings on the future of money and the role of cryptocurrency in that future. After 545 days, the order will request a follow-up report on the technology’s environmental impact. Sources say Biden will be signing the order most probably by today. As soon as this happens the landscape of the crypto industry in the US will change forever with the new regulations.