Biden’s order will require the Ministry of Finance, the Ministry of Trade, and other key agencies to prepare reports on the “future of money” and the role that cryptocurrencies will play, Reuters points out and adds that the directive increases the possibility of accepting virtual currencies in the American financial system.
Experts believe that the establishment of a regulatory framework for digital assets is necessary in order to combat illegal financing and prevent risks to financial stability and national security.
Last year, the White House announced that it was considering broad surveillance of the cryptocurrency market in order to try to solve the growing problem of ransomware and other types of cybercrime.
Bitcoin rose 9.1 percent to $42,280 on March 10 and is on track to achieve its highest percentage gain since February 28.
The jump in Bitcoin in the midst of the sharp rise in the value of digital tokens was prompted by optimism about the US audit of cryptocurrency surveillance, which US Treasury Secretary Janet Yellen called “historic”.
Yellen praised Biden’s directive, saying it strikes the right balance between fostering innovation and addressing potential risks. According to Bloomberg, that stimulated the mood in the industry, which has been looking for a better regulatory direction for a long time.
“For years, the crypto market has been hampered by a lack of regulatory clarity in the United States,” said Hayden Hughes, chief executive of social media trading platform Alpha Impact.
President Biden’s executive order, Bloomberg adds, instructs government agencies to investigate a number of topics in more detail, and calls for studies and policy recommendations on issues ranging from consumer protection to climate change.
Officials will also need to develop a framework for working with international partners to set standards for digital assets.
The agencies will have a period of 90 days to a year to complete the reports, depending on the problem, after which the administration, as it announced, will quickly implement the recommendations.
The crypto market learned overnight about Biden’s long-awaited executive order, which he signed on Wednesday, March 10, after the Ministry of Finance accidentally issued a statement the day before welcoming Biden’s move and announcing certain details in advance.
An important part of Biden’s directive is consumer protection, the American television channel points out, adding that countless stories have been recorded so far about investors who fell for crypto fraud or lost huge sums of money through cyberattacks on stock exchanges or users themselves.
The Biden administration wants regulators to “ensure sufficient oversight and protection against any systemic financial risks posed by digital assets.”
Another area that Biden’s executive order focuses on is climate change so that the government can study ways to make crypto innovation “more responsible” by reducing all negative climate impacts, especially since cryptocurrency requires more computing power.
According to CNBC, that caused an alarm for policymakers around the world, and last year China even completely banned cryptocurrency mining, which led to the exodus of crypto miners in the United States and other countries, such as Kazakhstan.
The White House directive also focuses on giving the United States a competitive advantage over other countries, which is especially significant now that China has banned cryptocurrencies.
Biden instructed the Department of Commerce to “establish a framework for fostering US competitiveness and leadership in digital asset technology and technology exploitation.”
Finally, CNBC points out, the Biden administration also wants to investigate the digital version of the dollar. The US Federal Reserve began work last year on research into the potential issuance of the digital dollar.
The central bank has released a long-awaited report detailing the advantages and disadvantages of such virtual money but has not yet taken a position on whether it thinks the U.S. should issue it.
Biden’s executive order for a comprehensive review of the government’s approach to cryptocurrencies aims to ensure the nation’s position as a leader in a fast-growing industry while reducing risks to consumers and the financial system itself, the Washington Post said.
Russia’s invasion of Ukraine has sharpened Washington’s focus on the benefits and dangers of digital currency, the paper points out. Since the beginning of the war, tens of millions of dollars have been collected in cryptocurrencies as donations to Ukraine.
Meanwhile, some U.S. policymakers have expressed concern about the possibility of Russia using cryptocurrencies to avoid sanctions, although others see it as an unprofitable option.
A revision of the US government in access to cryptocurrencies could, the Washington Post points out, result in a better regulatory response to the growth of digital assets in the global market, which is now estimated at almost two thousand billion dollars.
While industry leaders hail the White House order as a victory for the sector, US officials believe the order and the work that follows will “strengthen US leadership in the global financial system and protect the long-term effectiveness of critical national security instruments such as sanctions and anti-money laundering frameworks.”
While advocates of cryptocurrency welcome Biden’s order and its recognition of the positive elements of the industry, crypto skeptics see the executive order as a step backward in the process of its regulation, the Wall Street Journal points out.
The crypto industry in the USA led an intensive lobbying campaign last year in order to prevent more aggressive regulation of digital assets, the paper points out, referring to this week’s report of the consumer protection organization Public Citizen, which states that the number of cryptocurrency lobbyists has almost tripled from 115 in 2018 to 320 in 2021.
The costs of the lobbying sector, the report said, rose from $2.2 million to $9 million. Industry lobbyists say crude regulation would risk pushing most of the cryptocurrency market abroad.
On the other hand, adds the Wall Street Journal, financial regulators have been studying cryptocurrencies for years. The Financial Crime Implementation Network of the Ministry of Finance issued guidelines in 2014 on cryptocurrency payment systems.
The Securities and Exchange Commission has taken a number of coercive actions against individuals and entities in the sector, while the Commodity Futures Trading Commission has launched an initiative to study cryptocurrencies and other technological innovations in 2017.
Some experts argue that market participants hoped for more concrete direction and policy decisions rather than a directive requiring research, evaluation, and coordination within certain deadlines, while investors worry that an executive order called “Ensuring Responsible Digital Asset Development” will provide an opportunity for distribution of existing regulations.