In this article, we dive into the Biden executive crypto order exploring the various components of the order in detail. This includes the President’s requests for development around consumer and investor protection, financial stability, and illicit financial activity. Additionally, we discuss how the US plans to maintain its reputation and position as a leader in the global economy. Finally, we’ll look at the responses to the Biden executive crypto order thus far.
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Exploring the Biden Executive Crypto Order
In March 2022, the Biden executive crypto order was announced as an unprecedented move towards adopting and integrating digital assets. However, the White House statement refers explicitly to “ensuring the responsible development of digital assets,” which includes cryptocurrencies, among other assets. The Biden executive crypto order was a pioneering move from the President of the United States in an attempt for the US to “maintain technological leadership” in the evolution of the financial landscape. Furthermore, the White House writes that the Biden executive crypto order allows the US to “play a leading role in international engagement and the global governance of digital assets consistent with democratic values and U.S. global competitiveness”.
Overall, the Biden executive crypto order evaluates the risks and highlights the benefits of integrating blockchain technology. Specifically, the executive order covers six key priorities. These include consumer and investor protection, financial stability, and illicit finance. Also, the order discusses US leadership in the global financial system and economic competitiveness, financial inclusion, and responsible innovation. Below, we take a deeper look at the various sections of the Biden executive crypto order.
Protect US Consumers, Investors, and Businesses
The first part of the Biden executive crypto order stresses the importance of interdepartmental cooperation to establish regulatory procedures. Led by the Department of the Treasury, the leading theme of the executive order encourages the development of financial policies that will protect consumers, investors, and businesses. Also, regulatory parameters should allow for “equitable and economic growth”. Critically, the Biden executive crypto order sets out to formulate a constitutional protection plan to “safeguard against any systemic financial risks posed by digital assets”.
Protect the US and Global Financial Stability
In addition to protecting consumers, investors, and businesses, the Biden executive crypto order refers to macro regulatory policies. The order encourages the Financial Stability Oversight Council to identify and critically analyze any systemic financial risks from digital assets. ‘Systemic’ risks refer to vulnerabilities that hold the potential for an economy-wide or industry-wide collapse. As such, the Financial Stability Oversight Council, in conjunction with the Department of the Treasury and other policymakers, is being called by Biden “to address any regulatory gaps”.
As the US Dollar is the world reserve currency, any adjustment to its financial policy will have global ripple effects. Further, the US and its authorities must gain a comprehensive understanding of how different digital assets operate before introducing blockchain. The decentralization, transparency, and immutability of blockchain mean governments must complete extensive due diligence before implementing new financial policies.
Support Technological Advances and Ensure Responsible Development and Use of Digital Assets
An encouraging takeaway from the Biden executive crypto order is the commitment from the United States to educating its government around blockchain. Accordingly, the order directs “the US Government to take concrete steps to study and support technological advances”. Also, the executive order emphasizes the US Government’s world-leading responsibility for competent and reputable design, development, and social integration of digital asset systems. Plus, the Biden executive crypto order prioritizes the development of privacy, security, and combating illicit exploitation. Alongside these, the order states that “reducing negative climate impacts” is equally a priority with regard to the development of digital assets.
Mitigate the Illicit Finance and National Security Risks Posed by the Illicit Use of Digital Assets
Historically, Bitcoin (BTC) and other cryptocurrencies have gained a bad reputation for use in illicit online activities. However, as knowledge of blockchain becomes more widespread, there is an understanding that the malpractice lies with the users rather than the technology. Further, legacy financial operations (including cash) enable more frequent financial crimes than the crypto industry. Nevertheless, the consideration for mainstream adoption of cryptocurrencies requires creating preventative measures against the illicit use of digital assets.
Biden’s executive crypto order calls for “an unprecedented focus of coordinated action across all relevant US Government agencies”. Additionally, the order prompts US Government agencies to collaborate with international allies and partners. Collectively, the goal is to establish global frameworks and partnerships that will coordinate responsively to risks.
Promote US Leadership in Technology and Economic Competitiveness
Another central theme of the Biden executive crypto order is ensuring the US’ leadership position in the global financial system. Many economists have doubted the longevity of the world reserve currency since the infamous removal of the gold standard in 1971. Since then, with the absence of sound money policies and excessive inflation of the currency supply, questions around the value of the US Dollar are arising. As such, to combat any fear, uncertainty, and doubt (FUD) around the US Dollar and to remain a progressive country, the US will introduce ‘digital assets’ to its citizens.
The executive crypto order states for the Department of Commerce to collaborate with US Government agencies to establish policy frameworks. Moreover, such frameworks will lay the foundation for other agencies within their policies, operations, and development toward digital assets. The Biden executive crypto order pushes to “drive US competitiveness and leadership in, and leveraging of digital asset technologies”. Furthermore, Biden endeavors for US framework developments to influence wider, global adoption of digital assets. Thus, implementing policies for integrating digital assets means the US could potentially preserve the world reserve currency.
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Promote Equitable Access to Safe and Affordable Financial Services
The Biden executive crypto order makes a point of highlighting existing financial inequalities in the US. In the order, Biden declares that digital asset innovation should be considered a “national interest” to improve access to financial services. Specifically, the order refers to addressing US communities that have historically struggled with financial access. As such, research and analysis will be carried out to evaluate the potential disparate impact risk of digital assets. The executive order addresses the Secretary of the Treasury to collaborate with “all relevant agencies” to produce research reports accordingly.
Fundamentally, the Biden executive crypto order calls for equitable, accessible financial service for all US citizens. Moreover, it stresses only through digital asset innovation can this be achieved. The US government agency is calling for frequent updates regarding “economic growth, financial growth, and inclusion”. Additionally, this aspect of Biden’s executive order highlights the research needed to accurately determine how technological innovation may influence existing financial disparities. In turn, we can anticipate a report from the Secretary of the Treasury regarding the future of money and payment systems.
Explore a US Central Bank Digital Currency (CBDC)
Finally, the Biden executive crypto order discusses the development and integration of a United States central bank digital currency (CBDC). Thus far, the order outlines the research and development need for regulatory and security parameters of digital assets. The executive order confirms that the development of these parameters is to pave the foundations for introducing CBDCs. Further, Biden is placing urgency on researching and developing a US CBDC as a point of national interest.
The development plans for a US CBDC involves a multi-agency effort led by the Federal Reserve. Specifically, the Federal Reserve is responsible for the research and assessment efforts of a US CBDC. Also, the Federal Reserve will create a multi-country integration plan ensuring international partners are “consistent with US priorities and democratic values”. In turn, Biden is directing government agencies to examine existing technological infrastructure and intertwine a CBDC that protects Americans’ interests.
Biden Executive Crypto Order Update
The Biden executive crypto order was published in March 2022, with a follow-up eagerly anticipated by the crypto community. In June, the US Department of Justice published the first set of recommendations following the executive order. Attorney General, Merrick Garland, encourages people to be more forth-coming about cryptocurrency-related crimes. Additionally, Garland is pushing for “increasing information sharing, coordination, and deconfliction; and closing regulatory gaps across jurisdictions.”.
In July, the Treasury Department published its response to the Biden executive crypto order. Accordingly, the US Department of the Treasury website published a press release titled “Fact Sheet: Framework for International Engagement on Digital Assets”. However, there are mixed opinions surrounding the proposed framework. As a collaborative approach from the Treasury, Secretary of State, the Secretary of Commerce, the Administrator of the US Agency for International Development (USAID), and other leaders, the framework appears somewhat vague. The 2,400-word release uses phrases such as “The United States will also more actively develop…”, and “We will work to ensure that we learn about…”. Instead of proposing any solid, actionable, or measurable framework developments, the release is said to be more of an echo of the Biden executive crypto order.
What Does This Mean For Crypto?
Overall, the Biden executive crypto order is arguably a good thing for the crypto industry. Seeing the world-leading economy becoming accepting and welcoming of the innovation of digital assets sets an example for the rest of the world. Additionally, the order stresses the importance of education, research, and a governmental-level critical understanding of the underlying technologies.
Another aspect of the Biden executive crypto order many people are keen to hear about is the legalities surrounding the use of central bank digital currencies (CBDCs). In March, Biden addressed the Attorney General to present a legal assessment of existing legislation. In particular, Biden wants confirmation of whether legislative authority already exists or if a new authority is required. As such, this presents a once-in-a-lifetime opportunity for the Attorney General to design world-leading regulatory policies that will heavily influence broader economies.
Finally, there is much debate surrounding the use of the term “digital assets” in the Biden executive crypto order. The order suggests that “digital assets” is an umbrella term for central bank digital currencies (CBDCs), cryptocurrencies, and e-commerce payments. However, all the aforementioned currencies hold fundamentally different properties. Also, the use of the phrase “digital assets” leaves room for the inclusion of non-fungible token (NFT) financial assets, such as bonds. Nevertheless, the US painting CBDCs with the same brushstroke as cryptocurrencies yields anxiety for the blockchain-educated crypto community. There are extensive concerns surrounding the lack of privacy and censorship opportunities with CBDCs. Conversely, a cryptocurrency asset such as Bitcoin (BTC) is borderless, permissionless, and holds cryptographically-secure sound money principles.
Exploring the Biden Executive Crypto Order Summary
In March 2022, President Biden published an executive order on ensuring the responsible development of digital assets. The order primarily refers to an urgent demand for research and development in the innovation of digital assets. Specifically, it refers to the introduction of central bank digital currencies (CBDCs). Additionally, the Biden executive crypto order was a move from the White House to assure its world-leading position during the evolution of the financial landscape. As such, President Biden calls for an interagency collaborative approach to the design, development, and adoption of a US CBDC.
In the order, Biden outlines the need for an evaluation of financial imparity and a “multi-country experimentation” of CBDC integration. Moreover, the order places priorities on consumer, investor, and business security and the prevention of illicit behaviors. Also, the Biden executive crypto order highlights demands for sustainable development and the reduction of carbon impact from digital assets. However, responses to the executive order from the Treasury Department and the Department of Justice have been somewhat vague. This leaves many questions surrounding the finer details of the methodologies anticipated for introducing a new monetary system.
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