President Joe Biden has issued a first-of-its-kind executive order (EO) to regulate cryptocurrencies. But it’s unclear what exactly will change — if anything at all.
The White House announced the initiative in a statement on Wednesday and described it as the "first ever, whole-of-government approach to addressing the risk and harnessing the potential benefits of digital assets and their underlying technology."
With the order, the administration hopes to protect consumers and businesses while understanding the full impact crypto technology has on the environment.
"The rise in digital assets creates an opportunity to reinforce American leadership in the global financial system and at the technological frontier, but also has substantial implications for consumer protection, financial stability, national security, and climate risk," the release said.
Diving into the language of the press release, though, it’s a bit unclear what exactly the EO will accomplish. Much of the order seems to just encourage various financial bodies such as the Department of Treasury or the Financial Stability Oversight Council to research and assess the risk of cryptocurrencies.
Interestingly, though, the EO will also be "placing urgency" on exploring a US Central Bank Digital Currency, a potential US-backed crypto currency that the Federal Reserve has been researching for a few years now, so it’s also laying down the groundwork for a digital dollar.
While many might balk at the idea of government interference in what is typically hailed as a decentralized and unregulated currency, there are many crypto experts who see this as a good thing. After all, it gets rid of a bit of uncertainty surrounding regulation and can also help encourage investment in crypto technology.
"As agencies take the next step in studying the cryptoeconomy’s many dimensions, we hope they do so with an eye toward establishing regulatory clarity for the industry and the American public," Faryar Shirzad, chief policy officer of Coinbase, said on Twitter. "Digital assets have immense potential economic and social benefits for countries that establish sensible regulation."
It’s too soon to say what the EO means for the future of cryptocurrency and government regulation. One thing’s for sure: We're unlikely to see any immediate impact from it — but in time, we might see the groundwork being laid for things like a US-backed crypto and healthy regulations that limit the environmental impact of the tech.
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