The Biden administration is reportedly preparing to issue a government-wide strategy for the first time on digital assets, including cryptocurrencies. Bloomberg said the strategy is intended as an executive order and could be released as early as next month, citing people familiar with the matter who claimed multiple meetings were held over the plan.
According to a recent report from Bloomberg, the White House directive will present a government-wide strategy that examines the benefits and risks of digital assets. At this time, there is no official statement on the matter. However, various senior management officials are reportedly holding meetings to discuss the same issue and are expected to present a draft of the plan to President Joe Biden in the coming weeks.
The directive will detail the economic, regulatory and national security risks posed by cryptocurrencies. It will direct various federal agencies to assess the risks and opportunities related to cryptocurrency and will be asked to submit reports of their findings in the second half of 2022.
For example, the Financial Stability Oversight Council will evaluate the possible systemic effects of digital assets. Another report will identify illegal uses of cryptocurrencies.
The Biden administration is also expected to weigh in on the possibility of the Fed issuing a central bank digital currency (CBDC). On Thursday, the Federal Reserve released a long-awaited report on the CBDC and began a public comment period until May 20.
U.S. Authorities’ Perspective on Crypto
Regulating the crypto industry is a painstaking undertaking without a legal framework, and this legal framework does not exist in the US. Different legislators and politicians, who had different views on how to frame them, had one common view; the necessity of regulatory measures.
For example, Wyoming Senator Cynthia Lummis said positive regulation could benefit the industry. Others, like Senator Elizabeth Warren, have been more critical of crypto miners, exchanges, and digital assets in general, calling them a “lousy investment.” Additionally, Warren has expressed opposition to decentralized finance (DeFi) and called for pressure to be put on the industry, which he claims is “one of the darkest parts of the crypto world.”
The Senate held a hearing on stablecoins in the middle of last month, which resulted in a series of opposing views on the benefits, risks, and regulation of stablecoins. For example, Senator Patrick Toomey stated that digital currencies increase transaction speed and access to payment systems while reducing transaction costs. Opponents like Senator Sherrod Brown have called stablecoins “wild financial speculation,” emphasizing the risk of losing all investors’ money.
Other Notes
Currently, only Bitcoin (BTC) and Ethereum (ETH) are accepted as commodities. That’s why investments in them are regulated by the Commodity Futures Trading Commission (CFTC). Other cryptoassets have remained in limbo and for now have to live in fear of whether the Securities and Exchange Commission (SEC) will go after them for non-compliance.
While Gary Gensler, head of the Securities and Exchange Commission, recently tried to provide some clarity on the same by saying that all crypto projects that raise funds are subject to securities laws, an official framework has still not been released.
However, an ongoing litigation between the SEC and Ripple is expected to help further clarify this uncertainty for the crypto industry. Lawyers who are part of the XRP community predict that the case will be settled earlier this year and that Ripple and XRP will be on the winning side.
The United States is not the only country having discussions about crypto laws. Countries such as Russia and India have been focusing on this issue, especially recently. The United Arab Emirates (UAE) is several steps ahead of other countries when it comes to crypto regulations by establishing regulatory bodies and supporting the development of a crypto hub in Dubai.