In recent years, digital assets have grown past $3 Trillion. Additionally, nearly 16% of Americans have traded, invested in, or used cryptocurrencies. Countries are now moving toward exploring the Central Bank Digital Currencies (CBDCs). This would be a digital form of a country’s sovereign currency.
According to the White House press release, the recently signed executive order is geared toward maintaining technological leadership, supporting innovation, while still mitigating risks for consumers, businesses, and the broader financial system.
In summary, the Executive Order includes the following measures:
- Protect U.S. Consumers, Investors, and Businesses – The U.S. Treasury Department and other agency partners will develop policy recommendations to address implications and changes to financial markets. The order includes encouraging regulators to ensure sufficient oversight and safeguards as well.
- Protect U.S. and Global Financial Stability and Mitigate Systemic Risk – The Financial Stability Oversight Council will identify and mitigate economy-wide financial risks posed by digital assets and develop policies to address regulatory gaps.
- Mitigate the Illicit Finance and national Security Risks Posed by the Illicit Use of Digital Assets by directing an unprecedented focus of coordinated action across all relevant U.S. Government agencies to mitigate these risks. it also directs agencies to work with partners to ensure an international framework in response to risks.
- Promote U.S. Leadership in Technology and Economic Competitiveness to Reinforce U.S. Leadership in the Global Financial System by directing the Department of Commerce to work across the U.S. Government in establishing a framework to drive U.S. competitiveness and leadership in digital asset technologies.
- Promote Equitable Access to Safe and Affordable Financial Services by affirming the critical need for safe, affordable, and accessible financial services as a U.S. national interest that must inform our approach to digital asset innovation, including disparate impact risk. The Secretary of the Treasury, working with all relevant agencies, will produce a report on the future of money and payment systems, to include implications for economic growth.
- Support Technological Advances and Ensure Responsible Development and Use of Digital Assets by directing the U.S. Government to take concrete steps to study and support technological advances in the responsible development, design, and implementation of digital asset systems while prioritizing privacy, security, combating illicity exploitation, and reducing negative climate impacts.
- Explore a U.S. Central Bank Digital Currency (CBDC) by placing urgency on research and development of a potential United States CBDC, should issuance be deemed in the national interest. The order directs the U.S. Government to assess the technological infrastructure and capacity needs for a potential U.S. CBDC in a manner that protects Americans’ interests. The Order also encourages the Federal Reserve to continue its research, development, and assessment efforts for a U.S. CBDC, including development of a plan for broader U.S. Government action in support of their work.
The United States must maintain technological leadership in this rapidly growing space, supporting innovations while mitigating the risks for consumers, businesses, the broader financial system, and the climate. The U.S. must also play a leading role in international engagement and global governance of digital assets consistent with democratic values and U.S. global competitiveness.