Yesterday, President Biden signed a highly anticipated Executive Order on “Ensuring [the] Responsible Development of Digital Assets.” While the Biden Administration’s plans to bring cryptocurrency, non-fungible tokens (NFTs), and other digital assets under its purview come as no surprise, holders and advocates of digital assets can find solace in the President’s goal of "develop[ing] payment innovations and digital assets” in order to “reinforce United States leadership in technological economic competitiveness.”
At a top level, the Executive Order says that digital assets are here to stay but must be responsibly regulated.
As expected, the Executive Order points out that the unregulated use of digital assets can increase risks of cybercrime, money laundering, and circumventing financial sanctions regimes. On the other hand, it makes clear that digital assets, when used responsibly, can make investments and the transfer of funds, whether domestic or international, “cheaper, faster, and safer” for Americans. As several administrative agencies work to mitigate financial risks to consumers, investors, and businesses from digital assets, we can expect an uptick in regulation surrounding anti-money laundering (AML), countering the financing of terrorism (CFT), and securities. However, the President’s recognition of digital assets as tools to “expand equitable access to financial services” and “promot[e] greater and more cost-efficient access to financial products” bodes well for individuals and businesses interested in this technology.
Importantly, the Biden Administration is placing the “highest urgency” on researching and developing options for the deployment of a United States Central Bank Digital Currency (CDBC). To that end, in six months’ time, the Secretary of the Treasury will submit a report to the President detailing, among other things, the potential implications of a US CDBC on financial inclusion, existing currencies and payment systems, national security, financial crime, and democracy. Further by that time, the Attorney General will submit an assessment of what legislative changes, if any, are necessary to issue a US CDBC “should it be deemed appropriate and in the national interest.”
By noting that digital asset issuers and other entities “should, as appropriate, be subject to and in compliance with regulatory and supervisory standards,” President Biden’s Executive Order signals a potential sea change for many cryptocurrencies and other digital assets. Though its impact won't be felt immediately, the Executive Order serves as a “coming of age” for the maturing landscape of digital assets, bringing with it the promise of a brighter future through technological innovation and meaningful oversight. Nevertheless, some are skeptical this may be the calm before the storm of digital asset regulation.
At a top level, the Executive Order says that digital assets are here to stay but must be responsibly regulated