Biden orders government to study digital dollar and other cryptocurrency risks

WASHINGTON, March 9 (Reuters) – U.S. President Joe Biden on Wednesday signed an executive order requiring the government to assess the risks and benefits of creating a central bank digital dollar, along with other cryptocurrency issues , the White House said.

Bitcoin has been in the news as the administration’s holistic and deliberative approach eased market fears of an immediate regulatory crackdown on cryptocurrencies. In midday trading, bitcoin rose 9.1% to $42,280, on track for its biggest percentage gain since Feb. 28. read more

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

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Extensive oversight of the cryptocurrency market, which topped $3 trillion in November, is essential to ensuring U.S. national security, financial stability, and competitiveness, and warding off the growing threat of cybercrime , administration officials said.

Analysts see the long-awaited executive order as a stark acknowledgment of the growing importance of cryptocurrencies and their potential implications for US and global financial systems. Read more

“The growth of cryptocurrencies has been explosive,” Daleep Singh, deputy national security adviser for the economy, said in an interview with CNN.

Cryptocurrencies and digital assets can affect how people access banking services, consumer security and protection against volatility, and the primacy of the US dollar in the global economy, he said.

The executive order is part of an effort to promote responsible innovation but mitigates risk to consumers, investors and businesses, said National Economic Council director Brian Deese and national security adviser Jake Sullivan. the White House, in a press release.

“We recognize that past ‘financial innovation’ has too often failed to benefit working families, while exacerbating inequality and increasing systemic financial risk,” they said.

One of the main goals is to address the inefficiencies of the current US payments system and boost financial inclusion, especially of poor Americans, about 5% of whom currently do not have a bank account due to high fees, said said a manager.

Another key measure asks the government to assess the technology infrastructure needed for a possible US central bank digital currency (CBDC) – an electronic version of dollar bills in your pocket.

But it could take years to develop and introduce a “digital dollar,” administration officials warned Wednesday, noting that the Federal Reserve in January referred the matter to Congress. Read more

Administration officials said the United States is taking great care in deciding whether — and how — to move forward with the development of a digital dollar, given the dollar’s role as the primary reserve currency. world.

“We have to be very, very deliberate about this analysis because the implications of our moving in this direction are profound for the country that issues the world’s leading reserve currency,” one of the officials said.

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

According to the Atlantic Council, nine countries have launched central bank digital currencies and 16 others – including China – have started developing such digital assets, leading some in Washington to fear the dollar could lose some of its strength. its domination for the benefit of China.

The U.S. dollar remains supported by key fundamentals, including a commitment to transparency, the rule of law and the full independence of the Federal Reserve, the official said.

“The role of the dollar has been and will continue to be crucial to the stability of the international monetary system as a whole. Foreign central bank digital currencies and their introduction on their own do not threaten that dominance,” the official said.

Asked if China could develop a competitive advantage if it acted sooner, an administration official said U.S. officials would monitor developments with a view to maintaining the centrality of the dollar in the global economy.

The order calls for more than a dozen reports, including from the Securities and Exchange Commission and the Consumer Financial Protection Bureau, to assess the issues raised by cryptocurrencies, including systemic risk and consumer protection.

One of the main goals is to address the inefficiencies of the current US payments system and boost financial inclusion, especially of poor Americans, about 5% of whom currently do not have a bank account due to high fees, said said a manager.

Industry leaders, including Blockchain Intelligence Group chief Lance Morginn, called the order short-sighted because it displaces industry demand for wider adoption of crypto in the United States with more analysis and reports.

“We are at a pivotal moment in history where the world is watching how digital assets are being used in nation building and how digital assets are creating transparency in financial transactions like never before,” Morginn said.

“If the U.S. government takes too long to enact digital asset policies, it runs the risk of the industry shifting to other financial capitals that prioritize blockchain technology.”

The chairs of financial regulatory agencies, including the CFPB and the SEC, welcomed the decision and said they would fully comply with it.

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Reporting by Andrea Shalal and Katanga Johnson; Additional reporting by Doina Chiacu; Editing by Michelle Price, Simon Cameron-Moore, Mark Porter and Shri Navaratnam

Our standards: The Thomson Reuters Trust Principles.

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