For years, the US, which is the biggest economy in the world, and an important player in the crypto market, has not had a comprehensive law on the crypto sector. The issue has caused many companies to avoid doing business in the US. Despite the lack of comprehensive crypto regulation, the crypto sector has continued to thrive in the US. However, that could soon change as it has been reported that the Biden administration is working on an executive order for the crypto sector.
Details of the Crypto Executive Order
While no set timelines have been revealed, President Biden is expected to issue an executive order, which would direct federal agencies to create a strategy for crypto regulation. Speculation regarding the crypto executive order began circulating at the start of 2022. At the time, it was reported by Bloomberg that the US was working on an executive order to study the risks of the sector.
The Bloomberg report speculated that the Biden administration would issue the order before the end of February 2022. With just five days until the end of the month, it would appear that the most likely time to release the executive order is this week.
Due to Russia invading Ukraine this week, the executive order will likely be pushed back. With death tolls continuing to rise in Ukraine, Biden has been forced to switch his attention to Russia in the form of issuing economic sanctions. Given the recent events, it would be logical to think digital asset policy is not top of the list at the moment…
One area that will be covered in the executive order is an order to the Office of Science and Technology to conduct a comprehensive evaluation of the DLT within 180 days. It will then have to issue a follow-up report on the environmental impact of the technology within 545 days. The order will also task USAID with ensuring uniform rules and the adoption of digital assets around the world.
Possibility of a CBDC
Various reports indicate that the executive order would mandate federal agencies to investigate the feasibility of releasing a CBDC. It is likely no coincidence that the US Federal Reserve released a report on the feasibility of issuing a CBDC in January 2022.
The federal agencies will be tasked with analyzing payment systems to conduct a technical evaluation into the requirements for supporting a CBDC according to a Yahoo Finance report. The Federal Reserve has also begun asking for views from the public regarding a CBDC. However, it has not made any statements on whether it would issue a CBDC and when. The push for a CBDC is likely driven by actions in China, where the pilot for a CBDC is already active in several cities. There are genuine fears amongst leading experts that a Chinese CBDC could challenge the dominance of the USD on the global stage.
Lack of Action in Congress
The need for an executive order was likely necessitated by the lack of action by the US Congress. To date, it does not look like there are going to be any laws created at the federal level soon due to a lack of unity on the issue.
Summary
While there is no order for immediate action by any federal agency, the creation of regulatory certainty in the US could help spur the growth of the crypto sector. However, any regulation in this sector must be carefully weighed to ensure that it does not impede innovation.
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