We reported earlier this week that the U.S. government is expected to sign an executive order on cryptocurrencies. It was highly expected for a very long time, especially after the worries that Russia may evade the sanctions implemented on it by using cryptocurrencies.
Now, the long-awaited directive has been announced by the White House on Wednesday and it requires the government to evaluate the risks and benefits of digital assets and create a digital version of the dollar.
Seven specific measures
The order includes seven specific measures to focus on:
The first one is protecting consumers, investors, and businesses in the U.S. The government requires the Treasury Department to examine cryptocurrency and make policy suggestions. Regulators should also “ensure sufficient oversight and safeguard against any systemic financial risks posed by digital assets,” according to the report. This is especially significant since we have witnessed countless crypto scam cases over the years.
Another key measure is to protect financial stability both in the U.S. and globally. The regulation encourages the Financial Stability Oversight Council to identify and reduce economy-wide financial risks presented by digital assets.
The statement includes promoting U.S. leadership and giving the United States a competitive advantage over other countries as well. In this direction, the Department of Commerce has been entrusted with creating a framework to advance U.S. competitiveness and leadership in digital asset technology.
The necessity of being sensitive to climate change in the development of digital assets was also emphasized in the published report. Being responsible while supporting technological advances and ensuring reliable development and use of digital assets is especially important considering the fact that crypto mining has negative impacts on climate.
The order also contains the exploration of a digital version of the dollar, U.S. Central Bank Digital Currency (CBDC). Unlike cryptocurrencies, which have extremely volatile prices, the digital dollar would be valued the same as its paper equivalent.
Last year, the central bank released a report on the pros and cons of such digital assets, but there were no statements about the position of whether the U.S. should issue one. And now, although the country is not launching its own digital currency immediately, the White House has requested that the government prioritize CBDC research and development.
A win for crypto investors
The new policy agenda eliminates a major source of uncertainty for a sector that has already seen multiple regulatory scandals.
Over the U.S. executive action, bitcoin prices surged above $42,000 Wednesday on optimism. Jeremy Allaire, CEO of the crypto firm dubbed Circle, posted a tweet about the regulations and considered it "a watershed moment for crypto."
White House Exec Order and U.S. Government Strategy for Digital Assets -- a thread with thoughts; TLDR = this is a watershed moment for crypto, digital assets, and Web 3, akin to the 1996/1997 whole of government wakeup to the commercial internet. (1/7)— Jeremy Allaire (@jerallaire) March 9, 2022
Time will show how far this regulation will affect the unsteady industry. But for now, things seem positive in terms of crypto investors considering many of them seem to agree with Allaire.