Biden Orders Government To Study Digital Dollar, Other Cryptocurrency Risks

Biden’s order would require the Treasury Department, the Department of Commerce and other key agencies to prepare reports on the “future of money” and the role of cryptocurrencies.

Extensive monitoring of the cryptocurrency market, which exceeded $3 trillion in November, is necessary to ensure US national security, financial stability and US competitiveness, and to address the growing threat of cybercrime, officials said.

Analysts view the long-awaited executive order, first reported on Monday, as a clear acknowledgment of the growing importance of cryptocurrencies and their potential consequences for the US and global financial systems.

One of its key measures instructs the US government to assess the technical infrastructure needed for a potential US central bank digital currency (CBDC) – an electronic version of a dollar bill in your pocket.

In January, the US Federal Reserve kicked off the question of whether the United States should pursue a digital dollar to Congress, leading analysts to predict such a project would take years.

But one official said the United States would go ahead with developing a digital dollar, in keeping with the dollar’s role as the world’s primary reserve currency.

“We have to be very, very careful about that analysis because the implications of our move in this direction are profound for the country that issues the world’s primary reserve currency,” the official said.

The order also encourages the Federal Reserve to continue research and development efforts.

Nine countries have launched central bank digital currencies, and 16 others, including China, have started developing such digital assets. Atlantic CouncilSome in Washington are worried that the dollar may lose some of its dominance from China.

The official said the US dollar rests on key fundamentals, including a commitment to transparency, the rule of law and the complete independence of the Federal Reserve.

“The role of the dollar has been and will continue to be important to the stability of the international monetary system as a whole. Foreign central bank digital currencies and their introduction do not threaten this dominance.”

The official said the United States will monitor developments to maintain the centrality of the dollar in the global economy.

In addition, the order calls on agencies including the Securities and Exchange Commission and the Consumer Financial Protection Bureau to review other issues raised by cryptocurrencies, including systemic risk and consumer protection.

A key objective is to address inefficiencies in the current US payment system and promote financial inclusion, especially for poorer Americans, about 5% of whom currently do not have bank accounts due to high fees, an official said. . “Earlier today, there was no organized effort to bring together the expertise and authorities of the entire US government to inform a holistic approach to digital assets,” said another official.