The Executive Order on Ensuring Responsible Development of Digital Assets lays the groundwork for clearer cryptocurrency regulations in the United States. Here’s what industry insiders have to say about it.
- President Biden signed the Executive Order on Ensuring Responsible Development of Digital Assets on Wednesday.
- Many in the crypto industry are optimistic that it will result in clearer regulations and a more equitable approach to assets.
- Others argue that the order is devoid of substance or is overly focused on central bank digital currencies.
For years, the crypto industry has pleaded with the US federal government to coordinate its efforts on crypto policy, fed up with what it sees as enforcement-based regulation.
President Biden took a step in that direction today by signing the Executive Order on Ensuring Responsible Development of Digital Assets. The stated goals of the order are to find ways to reduce risks to both individual consumers and the global financial system, as well as to prevent cryptocurrency’s “misuse” for criminal purposes, all while cementing the United States’ role as a leader in technological innovation so that Americans who are “underserved by the traditional banking system” can gain more financial access.
The ABCs of Crypto Regulation
The bill mandates that an alphabet soup of agencies report back to the president on a variety of issues within three to seven months. Intelligence, State Department, and Treasury officials, for example, have 90 days to return a strategy for limiting the use of cryptocurrency in illicit and terrorist financing. The SEC, the FTC, and the CFTC, as well as other government banking bodies, will have 180 days to produce a report recommending consumer protection issues.
In short, it’s laying the groundwork for the kind of comprehensive regulations that industry actors have both requested and feared if they don’t get their way.
The CEO of USDC stablecoin issuer Circle, Jeremy Allaire, says the White House’s decision to use a “whole-of-government approach to simultaneously harness opportunities while controlling and mitigating inherent risks in responsible innovation is encouraging.” He says Circle, which advocated for such an approach, is confident that policymakers will walk away from the review process with a solid understanding of the opportunities that crypto presents.
The order, according to Denelle Dixon, CEO of Stellar Development, “recognizes the need for clarity so the industry can continue to evolve, grow, and meet the ever-increasing enthusiasm and momentum we see for the sector.”
“We were fearing a heavier hand, and possibly some tougher proclamations,” says Blockchain Association Head of Governmental Relations Dave Grimaldi, “but for an emerging industry, this is a sensible step toward protection, law enforcement, and education.”
According to Coin Center Executive Director Jerry Brito, the order “stands in stark contrast” to recent hot takes by politicians and media members on the dangers of cryptocurrency, whether that be destroying the environment or theoretically assisting Russia in evading sanctions: “The [executive order] is just more evidence that when serious officials take a sober look at crypto, the reaction is not to light their hair on fire, but rather to recognize it as an innovation that the United States will want to foster and lead while mitigating obvious risks.”
1.9 trillion dollars That is the value of the world’s cryptocurrencies as of March 9th, down roughly 36% from an all-time high of more than $3 trillion in November, but up a staggering 630% in the last two years.
A Lack of Enthusiasm
Erik Voorhees, a staunch libertarian and the founder of cryptocurrency platform ShapeShift, dismissed Biden’s actions as “more of the same”: “The crypto Executive Order basically says ‘we’re going to look into this stuff’ (as if they haven’t for years) and then lists a bunch of platitudes about balancing innovation with financial system protection.”
According to Human Rights Foundation CSO Alex Gladstein, the order is “heavy on CBDCs” and “doesn’t mention Bitcoin.” Gladstein sees Bitcoin as a critical tool for spreading human rights, whereas he sees central bank digital currencies (CBDCs) like the one being tested in China as potential vectors for financial surveillance.
Senator Cynthia Lummis (R-WY), a vocal supporter of Bitcoin, adds that she is “unconvinced on the need for a central bank digital currency” but “will continue to closely monitor the Federal Reserve’s work in this area.”
There are those hoping that the executive order will have unintended consequences. According to Messari founder Ryan Selkis, the order may provide President Biden with an opportunity to “look at the failures of the SEC in protecting investors, promoting fair crypto markets in the US, and promoting capital formation”—the very objectives the executive order lays out.
According to the executive order, the Treasury will team up with other agencies to create a report on the future of money and payment systems.
I write about blockchain, crypto, NFTs and other disruptive technologies and innovations.