The White House is set to release an executive order this
week tasking several federal agencies with conducting a broad review of
cryptocurrencies, including studying the creation of a U.S. digital currency,
according to a person familiar with the matter.
The executive order, which the White House is expected to
reveal in the coming days, will task the Treasury, Commerce, State and Justice
departments, among other agencies, with studying elements of the fast-growing
cryptocurrency market, the person said. The agencies will have roughly three or
six months to conduct a review and prepare a public report with recommendations
for the federal government’s approach to digital tokens.
Cryptocurrency is a name given to a broad group of digital
assets, including widely held bitcoin and ether, thousands of lesser known
coins and so-called stablecoins, digital assets designed to be easily redeemed
for dollars. Unlike private cryptocurrencies, a U.S. digital currency would be
issued by and backed by the Federal Reserve, as are U.S. paper dollar bills and
coins.
The move reflects policy makers’ growing awareness of
cryptocurrencies as they have exploded in value. Since bitcoin was launched 13
years ago, the federal government has taken a piecemeal approach to the asset class,
with some agencies largely sidestepping it while others seek to squeeze it into
existing regulatory frameworks designed decades earlier.
The White House will ask the Treasury Department to study
the creation of a U.S. digital currency, a possibility that the Federal Reserve
has already started to evaluate, while the Justice Department will be tasked
with reviewing whether Congress would need to pass new legislation for a
central-bank digital currency. The person said the order will request the
Office of Science and Technology Policy at the White House to look at the
technical considerations of creating a U.S. digital currency.
The White House executive order will also task the Treasury
Department with reviewing the possible risks cryptocurrencies pose to broader
financial stability, as well as the illicit-finance and national security risks
that the tokens present, according to the person. Under the order, the Treasury
Department will work with the Securities and Exchange Commission, the Federal
Trade Commission and the Commodity Futures Trading Commission to analyze the
risks they pose to consumers.
The Biden administration will review the environmental
impact of mining cryptocurrencies, a process of generating revenue by using
energy-intensive supercomputers to solve complicated puzzles. The
administration will also look at how cryptocurrencies shape economic
competitiveness as well as how foreign allies approach digital assets,
according to the person.
Regulators across the Biden administration have already
started to step up their scrutiny of digital assets. The Financial Stability
Oversight Council last year called stablecoins “an important potential emerging
vulnerability,” for example, and the Treasury Department has pressed Congress to
pass legislation regulating them.
Bloomberg previously reported that the White House was
preparing an executive order on cryptocurrencies.
Click here for the
original article.