Joe Biden Directs His Government To Study Cryptocurrencies And CBDC

Biden wants his government to learn crypto. (Pixabay)

JAKARTA - US President Joe Biden is rumored to be issuing an executive order next week. The order from President Biden will direct institutions across governments to study cryptocurrencies and central bank digital currencies (CBDC). From there, the government can formulate a strategy to regulate digital assets.

According to a Yahoo Finance report, an administration official familiar with the matter, the forthcoming directive will commission a CBDC study and call on various agencies including the Treasury, State, Justice and Homeland Security to develop reports on the future of money and payment systems. Meanwhile, the Policy Director of the Science and Technology Office will conduct a technical evaluation of what may be needed to support the CBDC system.

The move comes as Bloomberg News reported last Wednesday that disagreements had developed between the White House and the Treasury over cryptocurrency regulations, but a Treasury official dismissed those conditions as "inaccurate." The administration is involved in a broad effort to regulate the sector, with the FBI forming a new crypto unit led by an experienced computer crime prosecutor.

The Financial Stability Supervisory Board (FSOC), which was set up after the 2008 financial crisis to monitor risks to the system, will be asked to study financial stability issues arising from digital assets. The President's Working Group on Financial Markets has assigned the FSOC to look into the systemic risks of stablecoins.

This week, Undersecretary of Finance Nellie Liang told the Senate that the board is discussing the prospects for risks posed by stablecoins and taking steps to see what the regulatory authorities have in store. The Treasury Department hopes Congress will act because its powers are limited.

Meanwhile, the Attorney General, together with the FTC and the Bureau of Consumer Financial Protection, will be asked to consider what impact the growth of digital assets will have on market competition. The SEC, CFTC and Federal Reserve, FDIC and OCC are expected to consider market protection measures in their jurisdictions.

The order will also look at efforts to protect consumers, investors and businesses. The Treasury Department in consultation with the Securities and Exchange Commission, Commodity Futures and Trading Commission, and federal banking agencies will be responsible for developing the report to the president on how to hedge against risks to cryptocurrencies.

The Chair of the FTC and the Director of the CFPB will also be asked to look into the privacy concerns that could potentially be created for digital assets.

The Office of Science and Technology Policy will submit a report to the president on digital distributed ledger technology within 180 days, with updates on DLT and its impact on the environment within 545 days.

The government will also coordinate with other countries around the world to standardize the rules for crypto. The Department of State, Finance, Department of Trade and USAID will work to create a framework for interagency international engagement with foreign partners in international forums to increase adoption of digital assets and standardize rules.

The executive order offers the White House, Treasury and other members of the government the opportunity to consider digital dollars, a framework the Fed unveiled in January. Last week, Liang told Yahoo Finance Treasury "absolutely supports the urgent study of the CBDC," but does not outright endorse it.