The White House Prepares to Place Itself at the Forefront of US Crypto Policy

According to people familiar with the matter, the Biden administration is planning to release an initial government-wide strategy for digital assets as soon as next month, tasked federal agencies with assessing the risks and opportunities they present.

According to the people, senior administration officials have met several times to discuss the plan, drafted as an executive order. The directive, presented to President Joe Biden in the coming weeks, places the White House at the forefront of Washington’s efforts to combat cryptocurrencies.

Over the last few years, federal agencies have taken a piecemeal approach to digital assets, and Biden’s team is under pressure to take the lead. Industry executives frequently complain about a lack of clarity in US rules, while others fear that China’s and other countries’ embrace of government-backed coins will endanger the dollar’s dominance.

The Biden administration’s increased focus comes at a time when the volatile cryptocurrency market is generating widespread consumer interest. Bitcoin, the most popular and liquid cryptocurrency, fell below $37,000 on Friday, down from a high of nearly $69,000 in November.

According to people who asked not to be identified because they were discussing internal deliberations, the late-stage draught of the executive order details the economic, regulatory, and national security challenges posed by cryptocurrencies. It would require various agencies to submit reports by the second half of 2022.

The Financial Stability Oversight Council, a group composed of the heads of Washington’s top financial watchdogs, would conduct a study on the potential systemic implications of digital assets. Another government report would look into the use of virtual coins for illegal purposes.

Meanwhile, the directive would require other agencies, ranging from the State Department to the Commerce Department, to weigh in on defining roles. Some of these tasks will be designed to keep the United States competitive as the world increasingly adopts digital assets. 

The administration’s plan, including the order’s directives, could be tweaked before it’s finalized, according to the sources.

According to people familiar with the discussions, the administration will also weigh in on the possibility of the United States issuing a government-backed coin known as a central bank digital currency, or CBDC. However, one of the sources claims that the administration will hold off on taking a firm stance because the Federal Reserve is still debating the issue. The Federal Reserve released a preliminary paper on the subject on Thursday and invited public comment until May 20.

A CBDC could help the United States keep up with the rapid growth of private cryptocurrencies and coins produced by other countries, such as China. The Federal Reserve stated that it will not proceed without the support of the White House and Congress.

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Shambhavi Soni