US President Joe Biden signed an executive order on Wednesday asking the government to review the risks and benefits of cryptocurrencies. The US administration will also explore a digital version of the dollar.
Finally a regulation on cryptocurrencies in the United States? With this executive decree, Joe Biden wishes, finally, to define a clear government position on digital assets, while a decision has been long overdue for many months now. The American president has just asked his administration to study with precision the risks and advantages of cryptocurrencies for the country.
Six key areas are targeted: consumer protection, financial stability, illicit activities, US competitiveness, responsible innovation and financial inclusion.
Consumer protection seems to be an important part of the decree. Indeed, due to the lack of regulation, the number of cryptocurrency scams affecting investors is only increasing and the stories are numerous.
An international collaboration
In addition to consumer protection, the president's executive order directs "unprecedented coordinated action" by federal agencies to stamp out illegal activity within the ecosystem. As the system is global, the government wants to organize international collaboration to answer this question in the best way.
Financial stability is also at the heart of the decree since stablecoins are particularly monitored, in particular "Tether". These stablecoins fulfill a simple yet essential purpose in the cryptocurrency transaction system. In the context of Tether, this currency is backed by the dollar (one token is equivalent to one dollar) which makes it possible to escape volatility and to easily trade between a traditional currency and Bitcoin for example.
Major problem of "Tether", each time it produces a token, it guarantees to hold a dollar in the bank, except that that... nobody is sure and investigations are in progress. The role of these stablecoins raises enormous concerns for both the government and investors. It is in this sense that the decree asks regulators “to provide oversight and protection against any systemic financial risk posed by digital assets.”
The digital dollar to respond to China
Part of the text from the White House aims to give the United States a competitive advantage over other countries in the development of cryptocurrencies. This is especially important now that China has effectively banned cryptocurrencies. The U.S. President instructed the Department of Commerce to “establish a framework to drive and leverage U.S. competitiveness and leadership in digital asset technologies.”
Finally, the Biden administration also wants to explore a digital version of the dollar. If the decree does not specify that the United States will concretely launch its own digital currency, it asks to urgently grant research and development in this state currency.
An initiative largely overdue as China pushes to get its people to adopt its digital yuan. Finally, the energy cost is mentioned and the US President wants the government to study ways to make cryptographic innovation more responsible to reduce the negative impact on the climate.