Ultimate Resource For Biden’s Crypto Executive Order (#GotBitcoin)
Biden’s Executive Order Produces Few Answers In Crypto Reports From US Treasury . Ultimate Resource For Biden’s Crypto Executive Order (#GotBitcoin)
Crypto firms have been eagerly awaiting a series of U.S. government reports they hoped would clarify what the Biden administration and regulators intend to do about digital assets. Most of the documents are out now, but the picture remains murky.
However, one aspect is becoming increasingly clear: the federal government sees a lot of potential risks in crypto, and the various agencies believe stepping up enforcement actions may be an important step.
The reports from the Treasury Department – three of them released Friday – largely recommend the government continue assessing crypto risks, keep up enforcement actions and push forward with work on a digital dollar (without recommending the U.S. should have one).
The White House Office of Science Technology and Policy likewise published a report assessing the technical aspects of a digital dollar, while the Commerce Department’s report addressed competitiveness more broadly.
The Justice Department said it would launch a “Digital Asset Coordinator Network,” a group of 150 federal prosecutors nationwide who would specialize in investigating and prosecuting crypto crimes.
“The reports clearly identify the real challenges and risks from digital assets used for financial services,” Treasury Secretary Janet Yellen told reporters in a briefing. “If these risks are mitigated, digital assets and other emerging technologies could offer significant opportunities.”
The reports are a response to President Joe Biden’s executive order on digital assets, signed in March, which directed federal agencies to analyze different aspects and issues around the cryptocurrency ecosystem and provide recommendations for how the U.S. can both be a leader in the digital asset sector worldwide, as well as address any monetary stability or consumer protection risks posed by the burgeoning industry. Agencies will publish a total of 21 reports.
Previous reports – one from the Treasury Department, one from the Justice Department and one from the White House Office of Science and Technology Policy – were published over the past few months. Treasury published three more reports on Friday, and the White House issued what it described as its “first-ever framework for responsible development of digital assets.”
In a statement, National Economic Council Director Brian Deese and National Security Advisor Jake Sullivan said the different reports lay out concerns around consumer protections and illicit activities, and suggest how the administration can address these issues.
“Together, we are laying the groundwork for a thoughtful, comprehensive approach to mitigating digital assets’ acute risks and – where proven – harnessing their benefits. We remain committed to working with allies, partners, and the broader digital asset community to shape the future of this ecosystem,” the statement said.
After six months of study, the federal agencies made it clear that they’re devoting a lot of attention to crypto, but they aren’t ready to declare a definite course of action. Still unanswered is the single biggest U.S. question in crypto: What makes a token a security, and which ones should be regulated as commodities?
Token issuers and trading platforms are hungry for an answer, and not knowing could bring costly enforcement actions as the industry continues to complain it’s navigating without a map. Securities and Exchange Commission Chairman Gary Gensler insists crypto businesses have a clear and simple map that leads through his agency’s doors.
Gensler repeatedly asserts that existing federal securities laws apply to the crypto industry, going so far as to tell a U.S. senator on Thursday that “the asset-backed securities market took 10 or 11 years where they did these … exemptive orders or relief to individual issuers,” implying that a similar process may need to occur in crypto first.
A senior administration official told reporters that the reports recommend regulators “issue new rules and guidance” to close gaps around how existing financial regulations apply to cryptocurrencies, but noted that the agencies are independent of the executive branch.
“The recommendation is for the agencies to review their rules, clarify, coordinate and I think that the view is just saying … they have the necessary authorities … for firms that are not complying,” the official said.
On another titanic question for the industry – whether the U.S. will issue a central bank digital currency (CBDC) – the reports offered some ideas and suggested the Federal Reserve “continue its ongoing CBDC research, experimentation and evaluation,” but federal officials concluded that no digital dollar should be created unless it’s found to be in the “national interest.”
Who decides what’s in the national interest? That’s not so clear. The Fed will have a definite say, because the central bank would be responsible for managing it.
It may further require a decree from the administration, and Congress may also have to get involved. The answer could be steered by a future legal interpretation from the Justice Department, which is expected to outline the authorities the Federal Reserve needs before it can issue a digital dollar.
A senior administration official told CoinDesk that, in practical terms, the answer is all of the above. The Fed is independent but will collaborate on an answer with lawmakers, the administration and other federal agencies to decide the national interest.
For their part, Fed officials including Chair Jerome Powell have said they don’t intend to press forward without agreement from both the White House and Congress.
Meanwhile, the Treasury will lead a dedicated working group to coordinate the ongoing CBDC work, according to one of the reports.
Yellen, during the press briefing, said, “Right now, some aspects of our current payment system are too slow or too expensive. The report encourages us to continue working on innovations to promote a system that is more efficient and inclusive.”
One of the recommendations in that report is to advance CBDC policy and technical work, she said, though Yellen did not address how the government might make a decision to actually issue one.
The White House science office, in its own report, said it would form a research and development agenda with the National Science Foundation to further study CBDCs.
When asked what other practical next steps the reports are suggesting, senior administration officials responded that they’re seeking a “redoubling” of investigations and enforcement efforts against the industry. Friday’s White House document pointed at the SEC and Commodity Futures Trading Commission.
The White House also emphasized that agencies like the Consumer Financial Protection Bureau and Federal Trade Commission, two federal regulators that have not been as active as the earlier regulators in the crypto sector, should “redouble their efforts to monitor consumer complaints and to enforce against unfair, deceptive or abusive practices.”
The Treasury will also work on further reports – one to assess risks in decentralized finance (DeFi), due in February, and another looking into non-fungible tokens, due in July.
But the next report that could carry significant weight is expected next month, detailing potential finance-stability risks from the crypto industry.
While the Biden administration continues to study crypto and pursue “aggressive” enforcement, several efforts are underway in Congress to establish industry regulations.
Many of them focus on the Commodity Futures Trading Commission as a central watchdog for crypto activity, though none of them are nearing completion as the current legislative session winds to a close at the end of the year.
The bill that had the most momentum this year – a narrower effort to regulate stablecoins – has so far been stuck in committee negotiations.
The White House document suggested Biden could recommend a federal licensing or oversight regime for nonbank payment providers. One of the Treasury reports expanded on this, saying a payments regulatory structure would minimize risks but support these types of companies.
“Nonbanks are increasingly providing payment services, including issuing money (or money-like) liabilities and processing payments. On the one hand, participation by nonbank payments companies may contribute to higher levels of competition, inclusion, and innovation. On the other, if these firms are not adequately regulated and supervised, there may be risks to consumers, the financial system, and the broader economy,” one Treasury report said.
However, the report did not specify what this structure might look like. The crypto industry has long sought a federal regulatory regime that might allow crypto exchanges to apply for only one license that would allow them to operate nationwide, rather than have to apply for a money transmitter license in each state where they wish to operate.
White House Wants Regulators To Find Fraud, Abuse In Crypto Trading
* Recommendation Comes After Months Of Study By Federal Agencies
* President Biden Directed Government-wide Crypto Review In March
The White House wants American financial watchdogs to do more to weed out fraud and abuse in crypto trading as the US inches ahead with plans for the asset class.
The Biden administration called on the Securities and Exchange Commission and other regulators to “aggressively pursue investigations and enforcement actions against unlawful practices.” The recommendation is part of a new White House document that it billed as a “comprehensive framework for responsible development of digital assets.”
Washington has long struggled to strike a balance between cracking down on market abuses and encouraging a fast-growing industry that could have major economic and national security implications. While regulators have brought some cases against large crypto firms, the industry has fought back by raising significant legal challenges.
Thus far, US oversight also has been marked by a patchwork of overlapping approaches and jurisdictional battles. The conclusions released on Friday by the White House follow months of reviews by agencies that were required in a March executive order.
While the Biden administration called for a range of actions by government agencies, it stopped short of drawing many firm conclusions and in several cases simply called for more review.
For example, on the hot-button issue of the Federal Reserve issuing a central bank digital currency, or CBDC, the White House reached no major conclusion.
“The administration encourages the Federal Reserve to continue its research and experimentation,” National Economic Council Director Brian Deese and National Security Adviser Jake Sullivan said in a statement. “We will also launch an interagency working group to support Federal Reserve efforts by the considering policy implications of a potential CBDC, especially for our national security.”
The administration also laid out plans to explore how crypto-related technologies could bolster financial inclusion. Biden would weigh recommendations for a federal framework for overseeing nonbank payment services, the White House said.
Meanwhile, the White House urged the Consumer Financial Protection Bureau and the Federal Trade Commission to follow up on consumer complaints related to unfair, deceptive or abusive practices in crypto. At the same time, the US Treasury Department will finish a risk assessment on potential illicit activity linked to decentralized finance and nonfungible tokens next year.
“Innovation without adequate regulation can result in significant disruptions and harm to the financial system and individuals,” Treasury Secretary Janet Yellen said during a press briefing ahead of the White House’s release.
Friday’s report follows a related White House document last week that said crypto mining could hamper efforts to combat climate change.
Executive Order On Ensuring Responsible Development of Digital Assets
By the authority vested in me as President by the Constitution and the laws of the United States of America, it is hereby ordered as follows:
Section 1. Policy. Advances in digital and distributed ledger technology for financial services have led to dramatic growth in markets for digital assets, with profound implications for the protection of consumers, investors, and businesses, including data privacy and security; financial stability and systemic risk; crime; national security; the ability to exercise human rights; financial inclusion and equity; and energy demand and climate change. In November 2021, non‑state issued digital assets reached a combined market capitalization of $3 trillion, up from approximately $14 billion in early November 2016. Monetary authorities globally are also exploring, and in some cases introducing, central bank digital currencies (CBDCs).
While many activities involving digital assets are within the scope of existing domestic laws and regulations, an area where the United States has been a global leader, growing development and adoption of digital assets and related innovations, as well as inconsistent controls to defend against certain key risks, necessitate an evolution and alignment of the United States Government approach to digital assets. The United States has an interest in responsible financial innovation, expanding access to safe and affordable financial services, and reducing the cost of domestic and cross-border funds transfers and payments, including through the continued modernization of public payment systems. We must take strong steps to reduce the risks that digital assets could pose to consumers, investors, and business protections; financial stability and financial system integrity; combating and preventing crime and illicit finance; national security; the ability to exercise human rights; financial inclusion and equity; and climate change and pollution.
Sec. 2. Objectives. The principal policy objectives of the United States with respect to digital assets are as follows:
(a) We must protect consumers, investors, and businesses in the United States. The unique and varied features of digital assets can pose significant financial risks to consumers, investors, and businesses if appropriate protections are not in place. In the absence of sufficient oversight and standards, firms providing digital asset services may provide inadequate protections for sensitive financial data, custodial and other arrangements relating to customer assets and funds, or disclosures of risks associated with investment. Cybersecurity and market failures at major digital asset exchanges and trading platforms have resulted in billions of dollars in losses. The United States should ensure that safeguards are in place and promote the responsible development of digital assets to protect consumers, investors, and businesses; maintain privacy; and shield against arbitrary or unlawful surveillance, which can contribute to human rights abuses.
(b) We must protect United States and global financial stability and mitigate systemic risk. Some digital asset trading platforms and service providers have grown rapidly in size and complexity and may not be subject to or in compliance with appropriate regulations or supervision. Digital asset issuers, exchanges and trading platforms, and intermediaries whose activities may increase risks to financial stability, should, as appropriate, be subject to and in compliance with regulatory and supervisory standards that govern traditional market infrastructures and financial firms, in line with the general principle of “same business, same risks, same rules.” The new and unique uses and functions that digital assets can facilitate may create additional economic and financial risks requiring an evolution to a regulatory approach that adequately addresses those risks.
(c) We must mitigate the illicit finance and national security risks posed by misuse of digital assets. Digital assets may pose significant illicit finance risks, including money laundering, cybercrime and ransomware, narcotics and human trafficking, and terrorism and proliferation financing. Digital assets may also be used as a tool to circumvent United States and foreign financial sanctions regimes and other tools and authorities. Further, while the United States has been a leader in setting international standards for the regulation and supervision of digital assets for anti‑money laundering and countering the financing of terrorism (AML/CFT), poor or nonexistent implementation of those standards in some jurisdictions abroad can present significant illicit financing risks for the United States and global financial systems. Illicit actors, including the perpetrators of ransomware incidents and other cybercrime, often launder and cash out of their illicit proceeds using digital asset service providers in jurisdictions that have not yet effectively implemented the international standards set by the inter-governmental Financial Action Task Force (FATF). The continued availability of service providers in jurisdictions where international AML/CFT standards are not effectively implemented enables financial activity without illicit finance controls. Growth in decentralized financial ecosystems, peer-to-peer payment activity, and obscured blockchain ledgers without controls to mitigate illicit finance could also present additional market and national security risks in the future. The United States must ensure appropriate controls and accountability for current and future digital assets systems to promote high standards for transparency, privacy, and security — including through regulatory, governance, and technological measures — that counter illicit activities and preserve or enhance the efficacy of our national security tools. When digital assets are abused or used in illicit ways, or undermine national security, it is in the national interest to take actions to mitigate these illicit finance and national security risks through regulation, oversight, law enforcement action, or use of other United States Government authorities.
(d) We must reinforce United States leadership in the global financial system and in technological and economic competitiveness, including through the responsible development of payment innovations and digital assets. The United States has an interest in ensuring that it remains at the forefront of responsible development and design of digital assets and the technology that underpins new forms of payments and capital flows in the international financial system, particularly in setting standards that promote: democratic values; the rule of law; privacy; the protection of consumers, investors, and businesses; and interoperability with digital platforms, legacy architecture, and international payment systems. The United States derives significant economic and national security benefits from the central role that the United States dollar and United States financial institutions and markets play in the global financial system. Continued United States leadership in the global financial system will sustain United States financial power and promote United States economic interests.
(e) We must promote access to safe and affordable financial services. Many Americans are underbanked and the costs of cross-border money transfers and payments are high. The United States has a strong interest in promoting responsible innovation that expands equitable access to financial services, particularly for those Americans underserved by the traditional banking system, including by making investments and domestic and cross-border funds transfers and payments cheaper, faster, and safer, and by promoting greater and more cost-efficient access to financial products and services. The United States also has an interest in ensuring that the benefits of financial innovation are enjoyed equitably by all Americans and that any disparate impacts of financial innovation are mitigated.
(f) We must support technological advances that promote responsible development and use of digital assets. The technological architecture of different digital assets has substantial implications for privacy, national security, the operational security and resilience of financial systems, climate change, the ability to exercise human rights, and other national goals. The United States has an interest in ensuring that digital asset technologies and the digital payments ecosystem are developed, designed, and implemented in a responsible manner that includes privacy and security in their architecture, integrates features and controls that defend against illicit exploitation, and reduces negative climate impacts and environmental pollution, as may result from some cryptocurrency mining.
Sec. 3. Coordination. The Assistant to the President for National Security Affairs (APNSA) and the Assistant to the President for Economic Policy (APEP) shall coordinate, through the interagency process described in National Security Memorandum 2 of February 4, 2021 (Renewing the National Security Council System), the executive branch actions necessary to implement this order. The interagency process shall include, as appropriate: the Secretary of State, the Secretary of the Treasury, the Secretary of Defense, the Attorney General, the Secretary of Commerce, the Secretary of Labor, the Secretary of Energy, the Secretary of Homeland Security, the Administrator of the Environmental Protection Agency, the Director of the Office of Management and Budget, the Director of National Intelligence, the Director of the Domestic Policy Council, the Chair of the Council of Economic Advisers, the Director of the Office of Science and Technology Policy, the Administrator of the Office of Information and Regulatory Affairs, the Director of the National Science Foundation, and the Administrator of the United States Agency for International Development. Representatives of other executive departments and agencies (agencies) and other senior officials may be invited to attend interagency meetings as appropriate, including, with due respect for their regulatory independence, representatives of the Board of Governors of the Federal Reserve System, the Consumer Financial Protection Bureau (CFPB), the Federal Trade Commission (FTC), the Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC), the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, and other Federal regulatory agencies.
Sec. 4. Policy and Actions Related to United States Central Bank Digital Currencies. (a) The policy of my Administration on a United States CBDC is as follows:
(i) Sovereign money is at the core of a well-functioning financial system, macroeconomic stabilization policies, and economic growth. My Administration places the highest urgency on research and development efforts into the potential design and deployment options of a United States CBDC. These efforts should include assessments of possible benefits and risks for consumers, investors, and businesses; financial stability and systemic risk; payment systems; national security; the ability to exercise human rights; financial inclusion and equity; and the actions required to launch a United States CBDC if doing so is deemed to be in the national interest.
(ii) My Administration sees merit in showcasing United States leadership and participation in international fora related to CBDCs and in multi‑country conversations and pilot projects involving CBDCs. Any future dollar payment system should be designed in a way that is consistent with United States priorities (as outlined in section 4(a)(i) of this order) and democratic values, including privacy protections, and that ensures the global financial system has appropriate transparency, connectivity, and platform and architecture interoperability or transferability, as appropriate.
(iii) A United States CBDC may have the potential to support efficient and low-cost transactions, particularly for cross‑border funds transfers and payments, and to foster greater access to the financial system, with fewer of the risks posed by private sector-administered digital assets. A United States CBDC that is interoperable with CBDCs issued by other monetary authorities could facilitate faster and lower-cost cross-border payments and potentially boost economic growth, support the continued centrality of the United States within the international financial system, and help to protect the unique role that the dollar plays in global finance. There are also, however, potential risks and downsides to consider. We should prioritize timely assessments of potential benefits and risks under various designs to ensure that the United States remains a leader in the international financial system.
(b) Within 180 days of the date of this order, the Secretary of the Treasury, in consultation with the Secretary of State, the Attorney General, the Secretary of Commerce, the Secretary of Homeland Security, the Director of the Office of Management and Budget, the Director of National Intelligence, and the heads of other relevant agencies, shall submit to the President a report on the future of money and payment systems, including the conditions that drive broad adoption of digital assets; the extent to which technological innovation may influence these outcomes; and the implications for the United States financial system, the modernization of and changes to payment systems, economic growth, financial inclusion, and national security. This report shall be coordinated through the interagency process described in section 3 of this order. Based on the potential United States CBDC design options, this report shall include an analysis of:
(i) the potential implications of a United States CBDC, based on the possible design choices, for national interests, including implications for economic growth and stability;
(ii) the potential implications a United States CBDC might have on financial inclusion;
(iii) the potential relationship between a CBDC and private sector-administered digital assets;
(iv) the future of sovereign and privately produced money globally and implications for our financial system and democracy;
(v) the extent to which foreign CBDCs could displace existing currencies and alter the payment system in ways that could undermine United States financial centrality;
(vi) the potential implications for national security and financial crime, including an analysis of illicit financing risks, sanctions risks, other law enforcement and national security interests, and implications for human rights; and
(vii) an assessment of the effects that the growth of foreign CBDCs may have on United States interests generally.
(c) The Chairman of the Board of Governors of the Federal Reserve System (Chairman of the Federal Reserve) is encouraged to continue to research and report on the extent to which CBDCs could improve the efficiency and reduce the costs of existing and future payments systems, to continue to assess the optimal form of a United States CBDC, and to develop a strategic plan for Federal Reserve and broader United States Government action, as appropriate, that evaluates the necessary steps and requirements for the potential implementation and launch of a United States CBDC. The Chairman of the Federal Reserve is also encouraged to evaluate the extent to which a United States CBDC, based on the potential design options, could enhance or impede the ability of monetary policy to function effectively as a critical macroeconomic stabilization tool.
(d) The Attorney General, in consultation with the Secretary of the Treasury and the Chairman of the Federal Reserve, shall:
(i) within 180 days of the date of this order, provide to the President through the APNSA and APEP an assessment of whether legislative changes would be necessary to issue a United States CBDC, should it be deemed appropriate and in the national interest; and
(ii) within 210 days of the date of this order, provide to the President through the APNSA and the APEP a corresponding legislative proposal, based on consideration of the report submitted by the Secretary of the Treasury under section 4(b) of this order and any materials developed by the Chairman of the Federal Reserve consistent with section 4(c) of this order.
Sec. 5. Measures to Protect Consumers, Investors, and Businesses. (a) The increased use of digital assets and digital asset exchanges and trading platforms may increase the risks of crimes such as fraud and theft, other statutory and regulatory violations, privacy and data breaches, unfair and abusive acts or practices, and other cyber incidents faced by consumers, investors, and businesses. The rise in use of digital assets, and differences across communities, may also present disparate financial risk to less informed market participants or exacerbate inequities. It is critical to ensure that digital assets do not pose undue risks to consumers, investors, or businesses, and to put in place protections as a part of efforts to expand access to safe and affordable financial services.
(b) Consistent with the goals stated in section 5(a) of this order:
(i) Within 180 days of the date of this order, the Secretary of the Treasury, in consultation with the Secretary of Labor and the heads of other relevant agencies, including, as appropriate, the heads of independent regulatory agencies such as the FTC, the SEC, the CFTC, Federal banking agencies, and the CFPB, shall submit to the President a report, or section of the report required by section 4 of this order, on the implications of developments and adoption of digital assets and changes in financial market and payment system infrastructures for United States consumers, investors, businesses, and for equitable economic growth. One section of the report shall address the conditions that would drive mass adoption of different types of digital assets and the risks and opportunities such growth might present to United States consumers, investors, and businesses, including a focus on how technological innovation may impact these efforts and with an eye toward those most vulnerable to disparate impacts. The report shall also include policy recommendations, including potential regulatory and legislative actions, as appropriate, to protect United States consumers, investors, and businesses, and support expanding access to safe and affordable financial services. The report shall be coordinated through the interagency process described in section 3 of this order.
(ii) Within 180 days of the date of this order, the Director of the Office of Science and Technology Policy and the Chief Technology Officer of the United States, in consultation with the Secretary of the Treasury, the Chairman of the Federal Reserve, and the heads of other relevant agencies, shall submit to the President a technical evaluation of the technological infrastructure, capacity, and expertise that would be necessary at relevant agencies to facilitate and support the introduction of a CBDC system should one be proposed. The evaluation should specifically address the technical risks of the various designs, including with respect to emerging and future technological developments, such as quantum computing. The evaluation should also include any reflections or recommendations on how the inclusion of digital assets in Federal processes may affect the work of the United States Government and the provision of Government services, including risks and benefits to cybersecurity, customer experience, and social‑safety‑net programs. The evaluation shall be coordinated through the interagency process described in section 3 of this order.
(iii) Within 180 days of the date of this order, the Attorney General, in consultation with the Secretary of the Treasury and the Secretary of Homeland Security, shall submit to the President a report on the role of law enforcement agencies in detecting, investigating, and prosecuting criminal activity related to digital assets. The report shall include any recommendations on regulatory or legislative actions, as appropriate.
(iv) The Attorney General, the Chair of the FTC, and the Director of the CFPB are each encouraged to consider what, if any, effects the growth of digital assets could have on competition policy.
(v) The Chair of the FTC and the Director of the CFPB are each encouraged to consider the extent to which privacy or consumer protection measures within their respective jurisdictions may be used to protect users of digital assets and whether additional measures may be needed.
(vi) The Chair of the SEC, the Chairman of the CFTC, the Chairman of the Federal Reserve, the Chairperson of the Board of Directors of the Federal Deposit Insurance Corporation, and the Comptroller of the Currency are each encouraged to consider the extent to which investor and market protection measures within their respective jurisdictions may be used to address the risks of digital assets and whether additional measures may be needed.
(vii) Within 180 days of the date of this order, the Director of the Office of Science and Technology Policy, in consultation with the Secretary of the Treasury, the Secretary of Energy, the Administrator of the Environmental Protection Agency, the Chair of the Council of Economic Advisers, the Assistant to the President and National Climate Advisor, and the heads of other relevant agencies, shall submit a report to the President on the connections between distributed ledger technology and short-, medium-, and long-term economic and energy transitions; the potential for these technologies to impede or advance efforts to tackle climate change at home and abroad; and the impacts these technologies have on the environment. This report shall be coordinated through the interagency process described in section 3 of this order. The report should also address the effect of cryptocurrencies’ consensus mechanisms on energy usage, including research into potential mitigating measures and alternative mechanisms of consensus and the design tradeoffs those may entail. The report should specifically address:
(A) potential uses of blockchain that could support monitoring or mitigating technologies to climate impacts, such as exchanging of liabilities for greenhouse gas emissions, water, and other natural or environmental assets; and
(B) implications for energy policy, including as it relates to grid management and reliability, energy efficiency incentives and standards, and sources of energy supply.
(viii) Within 1 year of submission of the report described in section 5(b)(vii) of this order, the Director of the Office of Science and Technology Policy, in consultation with the Secretary of the Treasury, the Secretary of Energy, the Administrator of the Environmental Protection Agency, the Chair of the Council of Economic Advisers, and the heads of other relevant agencies, shall update the report described in section 5(b)(vii) of this order, including to address any knowledge gaps identified in such report.
Sec. 6. Actions to Promote Financial Stability, Mitigate Systemic Risk, and Strengthen Market Integrity. (a) Financial regulators — including the SEC, the CFTC, and the CFPB and Federal banking agencies — play critical roles in establishing and overseeing protections across the financial system that safeguard its integrity and promote its stability. Since 2017, the Secretary of the Treasury has convened the Financial Stability Oversight Council (FSOC) to assess the financial stability risks and regulatory gaps posed by the ongoing adoption of digital assets. The United States must assess and take steps to address risks that digital assets pose to financial stability and financial market integrity.
(b) Within 210 days of the date of this order, the Secretary of the Treasury should convene the FSOC and produce a report outlining the specific financial stability risks and regulatory gaps posed by various types of digital assets and providing recommendations to address such risks. As the Secretary of the Treasury and the FSOC deem appropriate, the report should consider the particular features of various types of digital assets and include recommendations that address the identified financial stability risks posed by these digital assets, including any proposals for additional or adjusted regulation and supervision as well as for new legislation. The report should take account of the prior analyses and assessments of the FSOC, agencies, and the President’s Working Group on Financial Markets, including the ongoing work of the Federal banking agencies, as appropriate.
Sec. 7. Actions to Limit Illicit Finance and Associated National Security Risks. (a) Digital assets have facilitated sophisticated cybercrime‑related financial networks and activity, including through ransomware activity. The growing use of digital assets in financial activity heightens risks of crimes such as money laundering, terrorist and proliferation financing, fraud and theft schemes, and corruption. These illicit activities highlight the need for ongoing scrutiny of the use of digital assets, the extent to which technological innovation may impact such activities, and exploration of opportunities to mitigate these risks through regulation, supervision, public‑private engagement, oversight, and law enforcement.
(b) Within 90 days of submission to the Congress of the National Strategy for Combating Terrorist and Other Illicit Financing, the Secretary of the Treasury, the Secretary of State, the Attorney General, the Secretary of Commerce, the Secretary of Homeland Security, the Director of the Office of Management and Budget, the Director of National Intelligence, and the heads of other relevant agencies may each submit to the President supplemental annexes, which may be classified or unclassified, to the Strategy offering additional views on illicit finance risks posed by digital assets, including cryptocurrencies, stablecoins, CBDCs, and trends in the use of digital assets by illicit actors.
(c) Within 120 days of submission to the Congress of the National Strategy for Combating Terrorist and Other Illicit Financing, the Secretary of the Treasury, in consultation with the Secretary of State, the Attorney General, the Secretary of Commerce, the Secretary of Homeland Security, the Director of the Office of Management and Budget, the Director of National Intelligence, and the heads of other relevant agencies shall develop a coordinated action plan based on the Strategy’s conclusions for mitigating the digital‑asset-related illicit finance and national security risks addressed in the updated strategy. This action plan shall be coordinated through the interagency process described in section 3 of this order. The action plan shall address the role of law enforcement and measures to increase financial services providers’ compliance with AML/CFT obligations related to digital asset activities.
(d) Within 120 days following completion of all of the following reports — the National Money Laundering Risk Assessment; the National Terrorist Financing Risk Assessment; the National Proliferation Financing Risk Assessment; and the updated National Strategy for Combating Terrorist and Other Illicit Financing — the Secretary of the Treasury shall notify the relevant agencies through the interagency process described in section 3 of this order on any pending, proposed, or prospective rulemakings to address digital asset illicit finance risks. The Secretary of the Treasury shall consult with and consider the perspectives of relevant agencies in evaluating opportunities to mitigate such risks through regulation.
Sec. 8. Policy and Actions Related to Fostering International Cooperation and United States Competitiveness. (a) The policy of my Administration on fostering international cooperation and United States competitiveness with respect to digital assets and financial innovation is as follows:
(i) Technology-driven financial innovation is frequently cross-border and therefore requires international cooperation among public authorities. This cooperation is critical to maintaining high regulatory standards and a level playing field. Uneven regulation, supervision, and compliance across jurisdictions creates opportunities for arbitrage and raises risks to financial stability and the protection of consumers, investors, businesses, and markets. Inadequate AML/CFT regulation, supervision, and enforcement by other countries challenges the ability of the United States to investigate illicit digital asset transaction flows that frequently jump overseas, as is often the case in ransomware payments and other cybercrime-related money laundering. There must also be cooperation to reduce inefficiencies in international funds transfer and payment systems.
(ii) The United States Government has been active in international fora and through bilateral partnerships on many of these issues and has a robust agenda to continue this work in the coming years. While the United States held the position of President of the FATF, the United States led the group in developing and adopting the first international standards on digital assets. The United States must continue to work with international partners on standards for the development and appropriate interoperability of digital payment architectures and CBDCs to reduce payment inefficiencies and ensure that any new funds transfer and payment systems are consistent with United States values and legal requirements.
(iii) While the United States held the position of President of the 2020 G7, the United States established the G7 Digital Payments Experts Group to discuss CBDCs, stablecoins, and other digital payment issues. The G7 report outlining a set of policy principles for CBDCs is an important contribution to establishing guidelines for jurisdictions for the exploration and potential development of CBDCs. While a CBDC would be issued by a country’s central bank, the supporting infrastructure could involve both public and private participants. The G7 report highlighted that any CBDC should be grounded in the G7’s long-standing public commitments to transparency, the rule of law, and sound economic governance, as well as the promotion of competition and innovation.
(iv) The United States continues to support the G20 roadmap for addressing challenges and frictions with cross-border funds transfers and payments for which work is underway, including work on improvements to existing systems for cross-border funds transfers and payments, the international dimensions of CBDC designs, and the potential of well-regulated stablecoin arrangements. The international Financial Stability Board (FSB), together with standard-setting bodies, is leading work on issues related to stablecoins, cross‑border funds transfers and payments, and other international dimensions of digital assets and payments, while FATF continues its leadership in setting AML/CFT standards for digital assets. Such international work should continue to address the full spectrum of issues and challenges raised by digital assets, including financial stability, consumer, investor, and business risks, and money laundering, terrorist financing, proliferation financing, sanctions evasion, and other illicit activities.
(v) My Administration will elevate the importance of these topics and expand engagement with our critical international partners, including through fora such as the G7, G20, FATF, and FSB. My Administration will support the ongoing international work and, where appropriate, push for additional work to drive development and implementation of holistic standards, cooperation and coordination, and information sharing. With respect to digital assets, my Administration will seek to ensure that our core democratic values are respected; consumers, investors, and businesses are protected; appropriate global financial system connectivity and platform and architecture interoperability are preserved; and the safety and soundness of the global financial system and international monetary system are maintained.
(b) In furtherance of the policy stated in section 8(a) of this order:
(i) Within 120 days of the date of this order, the Secretary of the Treasury, in consultation with the Secretary of State, the Secretary of Commerce, the Administrator of the United States Agency for International Development, and the heads of other relevant agencies, shall establish a framework for interagency international engagement with foreign counterparts and in international fora to, as appropriate, adapt, update, and enhance adoption of global principles and standards for how digital assets are used and transacted, and to promote development of digital asset and CBDC technologies consistent with our values and legal requirements. This framework shall be coordinated through the interagency process described in section 3 of this order. This framework shall include specific and prioritized lines of effort and coordinated messaging; interagency engagement and activities with foreign partners, such as foreign assistance and capacity-building efforts and coordination of global compliance; and whole‑of‑government efforts to promote international principles, standards, and best practices. This framework should reflect ongoing leadership by the Secretary of the Treasury and financial regulators in relevant international financial standards bodies, and should elevate United States engagement on digital assets issues in technical standards bodies and other international fora to promote development of digital asset and CBDC technologies consistent with our values.
(ii) Within 1 year of the date of the establishment of the framework required by section 8(b)(i) of this order, the Secretary of the Treasury, in consultation with the Secretary of State, the Secretary of Commerce, the Director of the Office of Management and Budget, the Administrator of the United States Agency for International Development, and the heads of other relevant agencies as appropriate, shall submit a report to the President on priority actions taken under the framework and its effectiveness. This report shall be coordinated through the interagency process described in section 3 of this order.
(iii) Within 180 days of the date of this order, the Secretary of Commerce, in consultation with the Secretary of State, the Secretary of the Treasury, and the heads of other relevant agencies, shall establish a framework for enhancing United States economic competitiveness in, and leveraging of, digital asset technologies. This framework shall be coordinated through the interagency process described in section 3 of this order.
(iv) Within 90 days of the date of this order, the Attorney General, in consultation with the Secretary of State, the Secretary of the Treasury, and the Secretary of Homeland Security, shall submit a report to the President on how to strengthen international law enforcement cooperation for detecting, investigating, and prosecuting criminal activity related to digital assets.
Sec. 9. Definitions. For the purposes of this order:
(a) The term “blockchain” refers to distributed ledger technologies where data is shared across a network that creates a digital ledger of verified transactions or information among network participants and the data are typically linked using cryptography to maintain the integrity of the ledger and execute other functions, including transfer of ownership or value.
(b) The term “central bank digital currency” or “CBDC” refers to a form of digital money or monetary value, denominated in the national unit of account, that is a direct liability of the central bank.
(c) The term “cryptocurrencies” refers to a digital asset, which may be a medium of exchange, for which generation or ownership records are supported through a distributed ledger technology that relies on cryptography, such as a blockchain.
(d) The term “digital assets” refers to all CBDCs, regardless of the technology used, and to other representations of value, financial assets and instruments, or claims that are used to make payments or investments, or to transmit or exchange funds or the equivalent thereof, that are issued or represented in digital form through the use of distributed ledger technology. For example, digital assets include cryptocurrencies, stablecoins, and CBDCs. Regardless of the label used, a digital asset may be, among other things, a security, a commodity, a derivative, or other financial product. Digital assets may be exchanged across digital asset trading platforms, including centralized and decentralized finance platforms, or through peer-to-peer technologies.
(e) The term “stablecoins” refers to a category of cryptocurrencies with mechanisms that are aimed at maintaining a stable value, such as by pegging the value of the coin to a specific currency, asset, or pool of assets or by algorithmically controlling supply in response to changes in demand in order to stabilize value.
Sec. 10. General Provisions. (a) Nothing in this order shall be construed to impair or otherwise affect:
(i) the authority granted by law to an executive department or agency, or the head thereof; or
(ii) the functions of the Director of the Office of Management and Budget relating to budgetary, administrative, or legislative proposals.
(b) This order shall be implemented consistent with applicable law and subject to the availability of appropriations.
(c) This order is not intended to, and does not, create any right or benefit, substantive or procedural, enforceable at law or in equity by any party against the United States, its departments, agencies, or entities, its officers, employees, or agents, or any other person.
JOSEPH R. BIDEN JR.
THE WHITE HOUSE,
March 9, 2022.
Justice Department Forms National Network Of Prosecutors Focused On Crypto Crime
New effort is part of trend toward putting more resources to target illegal activities involving digital currencies.
The Justice Department has tapped more than 150 federal prosecutors across the country to bolster law enforcement’s efforts to combat the rise in crime linked to the use of cryptocurrencies such as bitcoin, officials said.
The Digital Asset Coordinators Network is intended to designate subject-matter experts in U.S. attorneys’ offices on the complex technical and legal complications posed by cryptocurrency cases, the officials said.
The Biden administration is announcing the new effort Friday alongside the release of a broader set of frameworks from other agencies concerning regulatory approaches to developing the digital currency ecosystem.
The network was motivated in part due to the high degree of technical expertise that can go into prosecuting cryptocurrency cases, as well as digital currencies’ increasing popularity across several different areas of crime, said Eun Young Choi, the first director of the Justice Department’s national cryptocurrency enforcement team.
Those areas of crime include money laundering or financing terrorism, a vehicle of payment for ransomware hackers, and a direct target of theft, she added.
“Digital-asset crimes are truly multidisciplinary,” Ms. Choi said in an interview. “They are cross-border, complex, and challenging investigations and they require a certain level of competency.”
The network, which aims to train and educate other Justice officials on cryptocurrency issues, will include officials with backgrounds in the department’s tax, criminal, civil, national security and environmental divisions, she said.
The Justice Department has increasingly focused more resources on crypto-supported crime since bitcoin and other currencies have become more appealing to criminals, as they have exploded in both value and popularity over the past decade. “We have seen the growth of criminal use of digital assets increase in both scope and volume,” Ms. Choi said.
Regulators, lawmakers and law-enforcement officials have said some cryptocurrency platforms afford users anonymity that helps them to launder criminal proceeds, finance terrorism, or engage in public corruption.
Sanctions and other tools have been deployed with more frequency in recent months, but criminal prosecutions remain a key part of the administration’s strategy to police against bad actors.
But law-enforcement efforts extend beyond bringing indictments and making arrests. They also have increasingly been dedicated to disrupting criminals through technical means—which may rely on the cooperation of cryptocurrency exchanges—and seizing stolen cryptocurrency.
For example, U.S. authorities seized more than $30 million in cryptocurrency plundered from an online game this year by hackers linked to North Korea, one of the largest successes clawing back digital revenue from Pyongyang, the Journal reported earlier this month.
Ms. Choi said the new network was more than a marketing effort appended to existing efforts to combat the rise of crypto crime. “There is going to be a resource in every office that is [now] available to ensure we are arming the department writ large to do the work necessary to combat digital asset criminal conduct,” she said.
The network is also designed to aid the Justice Department as it grapples with novel challenges in the digital currency environment, such as decentralized finance protocols, which are playing an increasing role in money laundering and other criminal activities, according to blockchain data firms.
Former Justice Department officials expressed mixed views on whether the newly formed network would be effective given other demands placed on prosecutors.
“Proof will be in the pudding whether this network is empowered and prioritized or just another layer of bureaucracy,” said Zach Terwilliger, a former U.S. attorney for the Eastern District of Virginia.
Mr. Terwilliger, now a partner with the law firm Vinson & Elkins, said that some similar organizational efforts on other enforcement priorities had worked well for the department in the past.
But they have also at times “fallen flat when you don’t have actual buy-in” from U.S. attorneys who are contending with other priorities in their communities, he said, adding he was unsure if a designee was needed in every attorney’s office.
Sujit Raman, who led cryptocurrency enforcement efforts at the Justice Department until 2020 and now serves as general counsel of blockchain analytics firm TRM Labs, said the steps were welcome and necessary given how difficult and technical crypto cases can be.
“It’s clear DOJ remains committed to dedicating the resources needed to stay ahead of the curve in this fast-moving area,” Mr. Raman said.
Also Friday, the Justice Department released a report proposing potential regulatory and legislative actions that it determined could enhance law enforcement’s capacity to gather evidence and initiate prosecutions related to cryptocurrency criminal activity.
Among other priorities, the report urged expanding existing laws that bar employees of financial institutions from tipping off suspects to ongoing investigations to include digital-asset service providers.
The report, which was required under a previous executive order from President Biden, also called for strengthening a law that criminalizes the operation of unlicensed money-transmitting businesses and extending some relevant statute of limitations to account for the complexities posed by cryptocurrency investigations.
Such steps would likely require new legislation from Congress rather than executive action by the president, Ms. Choi said.
The Biden administration also released a series of other reports on cryptocurrencies as part of the executive order on Friday.
The reports broadly call for further government study and analysis of crypto markets, without prescribing any new policy directions or changes.
To protect consumers, the administration is recommending that regulatory agencies such as the Securities and Exchange Commission use existing authorities to regulate the sector and coordinate closely with other regulators.
“As we have seen over the past few months, risks stemming from improper conduct related to the trading of crypto assets continue to present an especially grave area of concern. This includes frauds, thefts and scams,” Treasury Secretary Janet Yellen said. “We recommend that agencies continue to rigorously pursue their enforcement efforts focused on the crypto asset sector.”
As the Journal reported earlier, the Biden administration will continue to study the possibility and practicalities of creating a digital dollar.
US Treasury Wants Public To Comment On Crypto’s Role In Illicit Finance
The Treasury Department listed a number of questions, asking the general public to weigh in on how it’s approaching cryptocurrencies and their possible role in illegal activities.
The U.S. Treasury Department wants the public, including the crypto community, to weigh in on how digital assets might be used in illegal activities, and how the department should respond to this issue.
The Treasury Department published a “request for comment” Monday listing over 20 questions and asking the general public to explain whether it has “comprehensively defined the illicit financing risks” tied to crypto, and noting that various federal officials – including the Treasury Secretary, Attorney General, Homeland Security Secretary, Director of National Intelligence and Secretary of State – would create a “coordinated action plan” to address the possible national security risks posed by digital assets.
“The growing use of digital assets in financial activity heightens risks of crimes such as money laundering, terrorist and proliferation financing, fraud and theft schemes, and corruption,” the notice said.
“These illicit activities highlight the need for ongoing scrutiny of the use of digital assets, the extent to which technological innovation may impact such activities, and exploration of opportunities to mitigate these risks through regulation, supervision, public private engagement, oversight, and law enforcement.”
The notice is tied to U.S. President Joe Biden’s executive order on crypto, it said, and references six “principal policy objectives,” which include consumer protection, financial stability, mitigating illicit finance, promoting U.S. leadership in the global financial system, supporting affordable financial services and boosting responsible development of digital assets.
The questions range from asking about how crypto might be used in illicit finance and what risks they pose, to the role of anti-money laundering and countering the financing of terrorism rules.
Other questions ask if there are any existing “regulatory obligations … [that] are not or no longer fit for purpose as it relates to digital assets.”
Yet another question, in a section on private sector engagement, asks, “How can the U.S. Department of the Treasury, in concert with other government agencies, improve guidance and public-private communication on [Anti-Money Laundering/Combating the Financing of Terrorism] and sanctions obligations with regard to digital assets?”
In a statement, Under Secretary for Terrorism and Financial Intelligence Brian Nelson said that “without appropriate controls and enforcement of existing laws, digital assets can pose a significant risk to national security by facilitating illicit finance, such as money laundering, cybercrime and terrorist actions.”
“As we work to implement the Illicit Finance Action Plan, hold bad actors accountable and identify potential gaps in existing enforcement, we look forward to receiving the public’s input on this urgent work,” he said.
The federal government has produced a number of reports already tied to the executive order, which was signed by Biden in March 2022. On Friday, the Treasury Department, Justice Department, White House Office of Science and Technology Policy and Commerce Departments all published a number of reports addressing various aspects of the cryptocurrency ecosystem in the U.S.
The White House science office and Treasury Departments both looked at the question of central bank digital currencies and the factors the U.S. should consider if it chooses to issue one.
It’s unclear whether the U.S. will actually issue a digital dollar, or what it may take to produce one.
The Department of Justice is looking at the question of what legal authorities the Federal Reserve might need to issue a central bank digital currency, though it has not submitted this analysis to the president yet.
A senior administration official, speaking at a press call ahead of last week’s publications, told reporters that “we’re not going to get ahead of ourselves now while the Fed studies the issue.”
“We believe it’s important to work with Congress on this like we have been,” the official said.
Other reports looked at broader questions of consumer protections and the role of crypto at large.
The Justice Department, however, announced it would launch a new network of prosecutors who would specialize in addressing crypto-related crimes.
The public has until Nov. 3 to submit comments on the Treasury addressing ransomware attacks, the illicit finance risks of cryptocurrency mixers and DeFi, and coordinating AML/CFT policy.
The United States Department of the Treasury will be calling for comments from the public on digital assets, including their views on how regulations may address the illicit uses of crypto.
In a document set to be published in the Federal Register on Tuesday, the U.S. Treasury requested public comment on “digital-asset-related illicit finance and national security risks as well as the publicly released action plan to mitigate the risks” related to President Joe Biden’s executive order on crypto from March.
The department invited the public to share their thoughts on the regulatory obligations the U.S. government had imposed that were “no longer fit for purpose as it relates to digital assets” as well as offer suggestions for alternative regulations addressing illicit finance risks and vulnerabilities.
“Illicit activities highlight the need for ongoing scrutiny of the use of digital assets, the extent to which technological innovation may impact such activities, and exploration of opportunities to mitigate these risks through regulation, supervision, public-private engagement, oversight, and law enforcement,” said the Treasury.
Specifically, the U.S. Treasury asked for potential additional steps it might take in regard to addressing ransomware attacks, illicit finance risks of cryptocurrency mixers and DeFi, and how the government could coordinate Anti-Money Laundering and Combating the Financing of Terrorism policy at the state and federal levels. The public has until Nov. 3 to submit comments.
The request for public comment followed the White House releasing a regulatory framework on digital assets on Sept. 16.
Many in the space, including crypto advocacy groups, criticized the administration for seemingly focusing on the illicit uses of crypto rather than its potential benefits.
As part of the framework’s requirements, the Treasury Department will create an “illicit finance risk assessment on decentralized finance” by February 2023.
The correct regulations will drive technological innovation and preserve crypto’s fundamental value propositions of freedom and empowerment while ensuring the right guardrails are in place for consumer protection and choice. (2/9)
— CZ Binance (@cz_binance) September 16, 2022
Biden’s executive order also had the Treasury Department and Federal Reserve exploring policy objectives and a U.S. central bank digital currency, or CBDC. On Sept. 17, the Office of Science and Technology Policy released a report on 18 different design choices for potentially implementing a digital dollar in the United States.
Brian Nelson, the Treasury under secretary for terrorism and financial intelligence, said in a statement Monday that public input will aid the agency in setting controls to hold bad actors accountable and to identify potential gaps in existing enforcement.
Various stakeholders, including crypto industry advocates, members of civil society, traditional financial institutions and crypto firms, are expected to provide comments, according to Alex Zerden, the principal of financial technology and risk advisory firm Capitol Peak Strategies LLC.
“This [commentary process] shows the Treasury is taking public engagement very seriously…from the lens of risk, as opposed to the one of risk and opportunity,” Mr. Zerden, a former Treasury official in the Obama and Trump administrations, said. He added that it would eventually be up to the Treasury in determining how to incorporate the comments it receives into its policy-making process.
Any possible rule-making from the Treasury that takes public input into account could potentially face pushback from the crypto industry.
The Treasury’s Financial Crimes Enforcement Network and the Federal Reserve Board in 2020 proposed rules requiring financial institutions and crypto firms to collect and pass along sender and receiver details on crypto transactions of more than $3,000.
The plan received thousands of comments from the public, many of them pushing back against the proposed new rules. The controversial idea was paused in January 2021, in part because the Biden administration imposed a regulatory freeze, which is common for incoming administrations. The rules remain in proposal status.
The request for comment comes as the crypto market sees another wave of volatility, adding to calls for greater regulatory oversight.
Bitcoin, the world’s largest cryptocurrency by market capitalization, traded at $18,776 earlier Monday, down 4.8% from its late Sunday levels, before recently moving back above $19,000.
The Treasury Department is expected to lay out the risks it perceives cryptocurrencies could pose to consumers and to the financial system in a series of reports that are set to become public this month, The Wall Street Journal previously reported.
The reports, which the Treasury is completing and sending to the White House, will feature Treasury’s analysis of crypto markets, and will each focus on one of four topics—the payment system, consumer protections, illicit finance and financial stability—but is unlikely to offer many specific policy prescriptions.
President Biden’s March executive order on digital assets commissioned the reports, asking other agencies to also produce analysis.
The Biden administration last Friday released a broader set of frameworks from various agencies concerning regulatory approaches to developing the digital currency ecosystem.
The Justice Department also said it has tapped more than 150 federal prosecutors across the country to bolster law enforcement’s efforts to combat the rise in crime linked to the use of cryptocurrencies such as bitcoin.
The Biden Administration’s Framework Failed To Acknowledge Crypto’s Advantages (#GotBitcoin)
The cryptocurrency industry needs substantive proposals that aim to do more than simply mitigate potential damage.
The long-awaited cryptocurrency regulation framework released by President Joe Biden’s Treasury Department this month attempted to outline a plan for managing the burgeoning crypto industry. Unfortunately, the department’s assessment failed to embody more substance than a mere mission statement.
While Biden’s administration appears to be taking a “whole-of-government approach” toward overseeing the decentralized finance (DeFi) sector and its ripple effects on the traditional economy, they are focused predominantly on defending against negative events — such as financial crime — and failing to facilitate positive events, such as the wealth-building opportunities that crypto offers to Americans excluded from the traditional big-banking system.
The new framework was a follow-up to Biden’s executive order in March, titled, “Ensuring Responsible Development of Digital Asset.” Officials focused predominantly on prosecuting money launderers and Ponzi schemers across jurisdictions.
That may come as no surprise, considering it was developed as crypto dominoes fell over the summer months. Those included the collapse of Terraform Labs, which led to an Interpol arrest warrant for its founder, Do Kwon; the Celsius Network’s bankruptcy; and the collapse of crypto prices.
Nonetheless, these events served the healthy purpose of shaking out bad actors who were in crypto for criminal or self-interested purposes. An effective set of laws related to crypto that prevent illicit activity and promote peer-to-peer financial transactions would work wonders for crypto’s public image. The Biden framework, which is more reactive than proactive, doesn’t achieve that.
As a nation, we don’t agree on much these days. We mostly want the United States to remain a global economic superpower, but we differ on how to do it. Stablecoins and other cryptocurrencies dismantle the power of federal currencies and allow individuals to accrue wealth independently, which is exactly why the federal government doesn’t like them.
The Biden framework literature suggests digital currency is key to securing America’s future as an economic leader. But if it grants power over crypto to the same authorities who wield power over traditional finance, the status quo isn’t going to change.
Instead of establishing the U.S. dollar’s “digital twin,” the government would be better off finding a way to coexist with alternative currencies.
It’s time to move beyond the enforcement of existing regulations and to institute new programs that integrate blockchain technology into areas most in need of disruption, such as healthcare and big business, even if we can’t quite agree on how to address currencies.
For example, keeping medical records on a blockchain — like Estonia’s highly advanced e-health system already does — would streamline and secure each person’s health data from birth through death, with each doctor or pharmacist along the way accessing an accurate history to make the best decision.
Collecting anonymized, uncorrupted medical data is going to lead to better research, better treatments and more cost-effective health care.
Similarly, putting property and business records on a blockchain would lead to more accountability for big, opaque corporations that make bold claims of charity and sustainability. Such transparency would allow consumers to make more informed decisions about who they buy from — and bank with.
The federal government should also nurture blockchain technology by investing in large-scale blockchain projects and incentivizing companies that use it to better serve the public.
Going forward, let’s hope both federal and state governments will cooperate to write real crypto industry legislation, not just to mitigate its damage, but to foster its potential.
Cryptocurrencies and other digital assets have the capacity to bring wealth-building opportunities to huge swaths of unbanked Americans, break up monopolies, and hold wealthy Goliaths accountable for their business dealings to a degree never seen before. The Biden framework is a lukewarm beginning, but we have a long way to go.