President Biden is expected to issue an executive order next week directing agencies across the government to study cryptocurrencies and a central bank digital currency (CBDC), and come up with a government-wide strategy to regulate digital assets.
According to an administration official familiar with the matter, the forthcoming directive will commission a study of a CBDC and ask a range of agencies – including the Departments of Treasury, State, Justice and Homeland Security – to develop a report on the future of money and payment systems. Meanwhile, the Director of the Office of Science and Tech policy will do a technical evaluation of what might be needed to support a CBDC system.
The move comes as Bloomberg News reported on Wednesday that a rift has developed between the White House and Treasury over crypto regulation, but a Treasury official disputed the account as “inaccurate.” The administration is engaged in a wide-ranging effort to regulate the sector, with the FBI forming a new crypto unit led by a seasoned computer crimes prosecutor.
The Financial Stability Oversight Council (FSOC), created after the 2008 financial crisis to monitor risks to the system, will be asked to study financial stability issues that arise from digital assets. The President’s Working Group on Financial Markets has already tasked the FSOC with looking into systemic risks of stablecoins.
This week, Treasury Undersecretary Nellie Liang told the Senate that the council is discussing the prospect of risks stablecoins pose and taking steps to see what authorities regulators have. Treasury is hopeful Congress will act since its authorities are limited.
Meanwhile, the Attorney General, along with the FTC and Consumer Financial Protection Bureau, will be asked to consider what impact the growth in digital assets could have on market competition. The SEC, CFTC and Federal Reserve, FDIC and OCC are expected to weigh market protection measures within their jurisdictions
The order will also look at measures to protect consumers, investors and businesses. Treasury in consultation with the Securities and Exchange Commission, the Commodities Futures and Trading Commission and federal banking agencies will be in charge of developing that report to the president on how to protect against risks to cryptocurrencies.
The FTC Chairman and Director of the CFPB will also be asked to look at privacy issues potentially created for digital assets.
The Office of Science and Technology policy will submit a report to the president on digital distributed ledger technology within 180 days, with an update on DLT and its impact on the environment in 545 days.
The government will also look at coordinating with other countries around the world to standardize rules for crypto. The State Department, Treasury, Commerce Department and USAID will work to create a framework for interagency international engagement with foreign counterparts in an international forum to enhance the adoption of digital assets and standardize rules.
The executive order offers the White House, Treasury and other members of the government the opportunity to weigh in on a digital dollar, a framework for which the Fed unveiled in January. Last week, Liang told Yahoo Finance Treasury “absolutely support[s] an urgent study of CBDC,” but stopped short of outright endorsing one.