Biden signs executive order to study crypto oversight

President Biden on Wednesday signed an executive order commissioning a series of reviews and reports on how the U.S. should regulate and develop the cryptocurrency industry.

The long-awaited executive order did not direct any federal agency to develop new regulations that could limit the use or availability of digital tokens, according to a summary released by the White House. Instead, the order directs several federal departments to analyze the potential benefits and risks of cryptocurrencies while charting a path for “responsible innovation,” senior administration officials said Tuesday.

“Without oversight, the explosive growth in cryptocurrency use with those risks to Americans and to the stability of our businesses, our financial system and our national security,” said one senior administration official on a Tuesday press call with reporters. The White House did not allow reporters to name the senior administration officials on the call.

The cryptocurrency market has exploded in popularity and prominence over the past several years, with digital tokens such as bitcoin and ethereum eclipsing trillions of dollars in value.

While policymakers have tried for years to develop specific rules and oversight standards for cryptocurrencies, the recent boom in cryptocurrency offerings and a quickly growing investor pool has given Washington greater urgency. 

The executive order directs the Treasury Department and financial regulatory agencies to assess “the implications of the growing digital asset sector and changes in financial markets for consumers, investors, businesses, and equitable economic growth,” according to the outline.

It additionally directs the Financial Stability Oversight Council to study whether cryptocurrencies pose risks to the financial system great enough to potentially trigger a crisis. 

The executive order also asks the Treasury Department and regulators to issue a report on the potential risks and rewards of a digital U.S. dollar. Several other countries, including China, are developing digital versions of their currencies that can be held, sent and used for payment.

The Federal Reserve, which would issue the digital dollar, is also studying the issue but leaders said they would not create one without Congress enacting a law to do so. 

Biden’s order also asks federal departments to coordinate on how to prevent the use of cryptocurrencies for financial crimes — such as evading sanctions — and “establish a framework to drive U.S. competitiveness and leadership in, and leveraging of digital asset technologies.”

Updated at 12:35 p.m.