According to unnamed sources cited by Bloomberg, the Biden administration is preparing to release an executive order that will outline a comprehensive government strategy on cryptocurrencies. This news comes on the heels of a U.S. Senate hearing on stablecoins, a Congressional subcommittee hearing on energy usage involved in cryptocurrency mining, and the release of a Federal Reserve discussion paper on the pros and cons of a central bank digital currency (CBDC). The order, which will apparently be issued in February, may be the White House’s attempt to take a central role in setting U.S. government policy on cryptocurrencies.
Per the Bloomberg report, Biden’s executive order would task federal agencies with studying the broad cryptocurrency industry and providing opinions on risks and opportunities as well as potential regulatory and oversight recommendations. The order will more specifically clarify the responsibilities of each agency involved, likely including the Treasury Department, Commerce Department, National Science Foundation and national security agencies. Agency reports would be due in the second half of 2022, Bloomberg’s sources said.
Although several Federal agencies have spent the last few years studying cryptocurrencies and potential regulatory responses to them, their efforts have largely been uncoordinated. According to CoinDesk, “the Office of the Comptroller of the Currency (OCC), Security and Exchange Commission (SEC), and Commodity Futures Trading Commission (CFTC) have issued guidance letters, informal statements and public rulemaking efforts to direct how different aspects of the crypto industry should comply with federal law.” Last year the OCC, the Federal Reserve, and the Federal Deposit Insurance Corporation (FDIC) discussed forming an “interagency policy sprint team” on cryptocurrencies. Sources told Bloomberg that one of the provisions of Biden’s executive order will be to coordinate these efforts.
Given the recent release of the Federal Reserve’s discussion paper on CBDCs and the rise in national digital currencies around the world, it seems likely that the executive order will also focus on keeping the U.S. dollar competitive, perhaps through digitization.
Lack of regulatory clarity has been the source of frustration for many in the cryptocurrency industry, which may be stifling innovation and limiting institutional adoption in the U.S. Indeed, in a House committee hearing last December, BitFury CEO Brian Brooks stated: “there is a reason why crypto talent is no longer concentrated in Silicon Valley, the birthplace of the original commercial Internet. Sure, some talent has merely moved from Silicon Valley to Miami — but a surprising number of talented founders have left for Portugal, Dubai, Abu Dhabi, Singapore, and other jurisdictions that are not at all unregulated but that have a more positive posture toward innovation and growth.”