"Weighing all of the factors in the is a policy and practical balancing act," Ledbetter added. "Adoption of US CBDC could fundamentally alter the role of both central and commercial banking," Lisa Ledbetter, a partner at corporate law firm Reed Smith and former Treasury Department attorney, told Yahoo Finance. Industry insiders will be watching closely, especially in regards to the development of a digital dollar. Their recommendations may be adopted as departmental regulations or passed off to Congress to incorporate into new legislation. Governmental agencies are now expected to commission studies over the next two to six months to explore the risks and benefits of cryptocurrency. Ether, the second-largest cryptocurrency, hit nearly $2,800. "The main concern was that the EO might force rushed rulemaking or impose new and bad restrictions, but there's nothing like that here."Īnd Binance CEO Changpeng Zhao jokingly tweeted, "I'm guessing crypto is not going away."Ĭryptocurrency markets surged in response to the executive order, with top-dog bitcoin rising nearly 9% last week to about $42,000. "Anyone worried that President Biden's executive order would spell doom & gloom for crypto can fully relax now," Chervinsky posted on Twitter. Jake Chervinsky, head of policy for the Blockchain Association, said the order was "about as good as we could ask for." Elizabeth Warren and other lawmakers raised concerns that "digital assets and alternative payment platforms may facilitate evasion of US and global sanctions" in Russia.ĭuring a March 4 hearing, Warren told Federal Reserve Chairman Jerome Powell that cryptocurrency was a "shadow, unregulated world" that Russian politicians, billionaires and companies could exploit. In a letter to Treasury Secretary Janet Yellen, Sen. Officials in Washington have raised concerns that cryptocurrency, a decentralized system that's encrypted and harder to track than traditional financial transactions, could be used by the Kremlin to elude sanctions. The executive order calls for measures to mitigate the "illicit finance and national security risks" that bad actors could pose and directs agencies to work with America's allies "to ensure international frameworks, capabilities, and partnerships are aligned and responsive to risks." While Biden insisted the directive has been in the works for months, it comes on the heels of the US and its allies issuing strict economic sanctions against Russia over the Ukraine invasion, including freezing assets of individuals and corporations. Is the White House investigating crypto because of Russia? To mine bitcoin, warehouses of high-power computers run 24 hours a day, consuming more energy in a year than all of Finland, The New York Times reported - or nearly 0.5% of all electricity consumption worldwide, a tenfold increase from 2017.īiden's order notes the substantial implications for "climate risk" and calls for the "responsible development, design, and implementation" of cryptocurrency. There are also concerns about the environmental impact of digital assets. Some 40 million American adults, or 16% of the population, have used, traded or invested in cryptocurrencies, according to the Pew Research Center. But, unlike cash, it could also allow the US central bank to see what citizens spent it on, raising privacy concerns. On the one hand, it could make it easier for the government to distribute financial aid to people who lack bank accounts. "It's just very hard for me to imagine that the US, given the status of the dollar as a dominant currency in international payments, wouldn't come to the table in that circumstance with a similar kind of an offering," Fed governor Lael Brainard told the National Association of Business Economics last year, The Wall Street Journal reported.īut many officials, Republican and Democrat, are ambivalent about a Fed digital dollar. The Federal Reserve began its own four-month investigation into the possibility of a "digital dollar" back in January. Will the US create its own cryptocurrency?īiden tasked the Department of the Treasury with determining whether it would be feasible to issue a US-backed central banking digital currency, also known as a CBDC, similar to ones that China, Sweden, the EU and other governments are working on. While Biden's order doesn't announce any new regulations, it hints they're likely on the way. "Broadly speaking, the White House is seeking to strike the right balance from the positives of crypto - financial efficiency, inclusion, American leadership in global finance - with its negatives: potential illicit financing, consumer and business abuse, and regulatory arbitrage." "The executive order should be thought of more as a call to action than as a specific game plan," writes Aaron Klein, an economist with the Brookings Institute.
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