US President Joe Biden mandated the coordination of federal agencies to draft cryptocurrency regulations in the first-ever executive order related to crypto.
The government’s holistic effort to regulate the crypto industry targets financial inclusion and responsible innovation, leadership in the global financial sector, illicit uses, financial stability, and consumer protection, according to an accompanying fact sheet that comes with the order.
The first crypto-targeted executive order mandates federal agencies to collaborate in the digital asset sector; however, the order is silent on the specific positions the administration desires for agencies to adopt.
Furthermore, the order does not specify new regulations that the crypto companies need to follow.
A top government official proclaimed his neutral stand on digital assets by explaining to reporters the possibility of destabilizing the US’s national security, financial system, or business stability. With no regulation system, cryptocurrency can be used by criminals to launder funds or evade sanctions.
Together with the negative possibility of being used by criminals, opportunities for American innovation and competitiveness could be provided by digital assets. Innovation creates and builds new industries, generates jobs and opportunities, and sustains the US’s leadership and global competitive edge in the world.
The executive order published on Wednesday began its conception in October 2021. This order defined six critical priorities for the administration: financial inclusion and US leadership, promoting “responsible innovation,” preventing illicit uses, protecting global financial stability, and protecting US interests.
An estimated 16% of US citizens or 40 million have invested or engaged in cryptocurrencies. With the increasing number of crypto trading platforms in the market, it can be difficult to choose which ones are secure and reliable to engage in. This led to the birth of automated systems like Crypto Engine which helps traders connect to trusted brokers for a safe trading environment.
Protection of investors
An administration official cited that the volatility of crypto is one issue that is related to the price of bitcoin at the beginning of the COVID-19 pandemic, which was estimated to be $10,300. In November, there was a peak of $70,000 which then fell again in the fall of 2021 and the start of 2022. Traders should be aware of the fluctuation of prices and be able to follow trends through online platforms that share updates on these. Various platforms share updates on crypto trends and tips on crypto trading and how investors can protect their money.
When the Treasury Department released a statement on Tuesday, the price of Bitcoin boomed to $3,000.
According to the administration official, the President has initiated a governmental approach to understand the macroeconomic and microeconomic risks that include the risks to individuals, investors, and businesses that engage with these digital assets.
One main goal is to protect the investor. Protecting the investor includes understanding the technology that operates digital assets. In addition to this, studying the existing financial system’s weaknesses and the areas not being served to all consumers are components of this effort.
The executive order has identified that risk assessment and the risk of potential benefits of digital assets include how to understand how the financial system works and how the system does not fulfil the clients’ needs in an efficient, inclusive, and equitable manner.
Clients could face a slow payment system, especially in cross-border payments.
‘Future of money’
The executive order directs the US Treasury Department to create a report on the future of money and payment systems.
The report, which was collaborated by inter agencies, will analyze the impact of cryptocurrencies on financial inclusion, economic and financial growth, national security, and the capacity of the system to meet the needs of the consumers.
There is a collaborative effort among the US Treasury Department, the FDIC (Federal Deposit Insurance Corporation, President’s Working Group in Financial Markets, and OCC (the Office of the to work on stablecoins, a specific kind of digital asset, and to recommend policies regarding this. The said order mandates the Treasury and interagency partners to enhance the recently published National Risk Assessments to identify major risks related to illegal activities with digital assets.
The executive order mandates these agencies to assess how we can issue a central bank digital currency in case such a scenario will be for the nation’s good.
This order is aligned with the current efforts of the Federal Reserve to study the digital issuance of the dollar. The central bank has published multiple reports in recent months to assess the concerns related to technology and policy when it comes to issuing a central bank digital currency (CBDC).