Joe Biden’s Executive Order on Ensuring Responsible Development of Digital Assets : Tech Daily

The White House, on Wednesday, 9th March, announced Joe Biden’s highly anticipated executive order regarding a whole-of-government’s approach to digital assets.  The order seeks to create a federal-level framework that clearly addresses the risks and potential benefits of this burgeoning category. As the world’s largest economy takes steps towards regulation, consumer protection, financial inclusion and stability, the category surrounding the promotion of blockchain technology and creation of a CBDC, is set to witness a significant growth and increased innovation.

What is an executive order?

In the United States, an executive order is a directive issued by the presidential office. It  serves to enforce operations of governmental agencies. It is one of the primary tools the US president uses to manage and mobilise the extensive resources available to the world’s largest economy.

What was this executive order about?

The order seeks to create a national policy towards digital assets across six key priorities:

1. Protection for Consumers, Investors & Businesses: The US Department of Treasury and other government agencies have been directed to assess and develop policy recommendations in relation to the crypto or digital asset category. The primary idea is to ensure that the interests of investors (retail and institutional) and other category players are protected. It also encourages regulators to create a framework that safeguards all players against systemic risk posed to the financial system by this particular category.

2. Promotion of U.S. and Global Financial Stability: The Financial Stability and Oversight Council has been asked to identify and mitigate economy-wide financial risks by providing recommendations that can address any existing regulatory gaps.

3. Mitigation of Risk from Illicit Use of Digital Assets: The coordinated effort of enforcement authorities have been directed towards ensuring digital assets are not used for illegal purposes. More so, due to the borderless nature of crypto assets, the  government will work with global allies and partners to create international frameworks and policies to respond to various risks.

4. Promotion of Category Leadership: Taking note of the widespread adoption of crypto assets and their growing importance globally, Biden seeks to reinforce the U.S.’ global financial leadership within the category through initiatives that will promote competitiveness and innovation. 

5. Ensuring Financial Inclusivity: The order affirms the need for equitable access to safe and affordable financial services related to the crypto category. The Secretary of the Treasury has been tasked with producing a report on the future of money and payment systems to further this end.
6. Development of a U.S. Central Bank Digital Currency (CBDC): Lastly, the executive order prioritises research and development of a potential United States CBDC along with a broader plan that will allow for support from relevant governmental agencies. With this, the U.S. will now join the ranks of many nations that have already taken steps in this direction.

Is the US going the India way – discussion and then decision?

Any step towards regulation and oversight needs to be made in consultation with both micro and macro industry players to ensure that the needs and concerns of all are adequately addressed. Unilateral decision-making can be shortsighted and may have far-reaching consequences. This is why it is crucial for governments to be democratic in their approach to policy-making, and in this case, both India and the US seem to be taking the right approach. 

How does this affect the future of crypto?
While it is premature to comment on the potential outcomes of this decision, we know that there are key areas that will be addressed. The first, of course, is consumer protection, which is the need of the hour. Mitigation of risk will result in increased adoption, enabling further growth of the category. Secondly, the US is poised to join over 100 countries that are taking steps towards creation of a CBDC, indicating that these will be an important part of future global economies. Lastly, promotion of the underlying technology while ensuring financial inclusion and overall economic stability will ensure that the category continues to flourish.

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