March 9, 2022: US President Joe Biden signed an executive order on Wednesday requiring the government to assess the risks and benefits of creating a digital dollar for the central bank, as well as other cryptocurrency concerns, the White House said.
Bitcoin surged in the news as the government’s holistic and deliberate approach calmed market fears about an immediate crackdown on cryptocurrencies by regulators. During midday trading, bitcoin BTC = BTSP rose 9.1% to $42,280, on track for the largest percentage gain since Feb. 28.
Biden’s order requires the Treasury Department, Commerce Department and other key agencies to prepare reports on “the future of money” and the role cryptocurrencies will play.
Broad surveillance of the cryptocurrency market, which rose more than $3 trillion in November, is essential to ensure US national security, financial stability and competitiveness and avert the growing threat of cybercrime, government officials said.
Analysts view the highly anticipated executive order as a clear recognition of the growing importance of cryptocurrencies and their potential implications for the US and global financial systems.
“The growth of cryptocurrencies has been explosive,” Daleep Singh, deputy national security adviser for economics, said in an interview with CNN.
Cryptocurrencies and digital assets could affect how people access banking, whether consumers are safe and protected from volatility, and the primacy of the US dollar in the global economy, he said.
The executive order is part of an effort to promote responsible innovation but mitigates the risk to consumers, investors and businesses, Brian Deese, director of the National Economic Council, and Jake Sullivan, White House national security adviser, said in a statement. .
“We are aware that past ‘financial innovation’ has all too often failed to benefit working families, exacerbating inequality and increasing systemic financial risk,” they said.
A key objective is to rectify inefficiencies in the current US payment system and encourage financial integration, especially of poor Americans, about 5% of whom currently do not have a bank account due to the high costs, an official said.
Another key measure is for the government to assess the technological infrastructure needed for a potential US central bank (CBDC) digital currency – an electronic version of dollar bills in your pocket.
But it could take years to develop and adopt a “digital dollar,” administration officials warned Wednesday, noting that the Federal Reserve referred the matter to Congress in January.
Government officials said the United States is paying close attention to deciding whether – and how – to proceed with the development of a digital dollar, given the dollar’s role as the world’s main reserve currency.
“We need to be very, very deliberate about that analysis, because the implications of our move in this direction are profound for the country that issues the world’s primary reserve currency,” one of the officials said.
The order also encourages the Federal Reserve to continue research and development efforts.
Nine countries have launched central bank digital currencies and 16 others — including China — have begun developing such digital assets, according to the Atlantic Council, leading some in Washington to worry that the dollar could lose some of its dominance over China. losses.
The US dollar remains supported by important fundamentals, including a commitment to transparency, the rule of law and full independence from the Federal Reserve, the official said.
“The role of the dollar was and remains crucial to the stability of the international monetary system as a whole. Central bank foreign digital currencies and their introduction in themselves pose no threat to this dominance,” the official said.
Asked if China could develop a competitive advantage if it moved sooner, a government official said US officials would monitor developments with a view to preserving the dollar’s central position in the global economy.
The order calls for more than a dozen reports, including by the Securities and Exchange Commission and the Consumer Financial Protection Bureau, to assess issues posed by cryptocurrencies, including systemic risk and consumer protection.
A key objective is to rectify inefficiencies in the current US payment system and encourage financial integration, especially of poor Americans, about 5% of whom currently do not have a bank account due to the high costs, an official said.
Reuters
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