President Biden signed an Executive Order today which directs federal agencies to coordinate their approaches to the crypto sector.
The “Executive Order on Ensuring Responsible Development of Digital Assets” does a few things. We decided to summarize them for you:
1. The order doesn’t specify how agencies should act or what regulations could be imposed.
This is basically like the Green New Deal, but crypto edition. If you’re perplexed by that comment, it might be because there’s a lot of saucy rhetoric about the Green New Deal — at its core, the climate proposal is just a few pages of commitments to solve the climate crisis. It spells out the consequences of what happens if we don’t act, then offers solutions. Nothing is binding.
2. The order directs the Treasury Department to prepare a report on “the future of money” and explain why the incumbent financial system doesn’t meet consumer demand.
One of the things that can be learned from this executive order is that the U.S. government is taking digital assets — crypto, DAOs, NFTs, tokens, and their place in the economy — seriously. The executive order touches on reviewing ways to arrest money laundering and terrorist financing. However, it also admires that U.S. financial regulations are ill-prepared to handle concepts like “airdrops” and “governance tokens.” That’s why a portion of the order asks regulators to figure out how we should amend existing regulations and come up with new ones.
The Financial Stability Oversight Council will review possible threats that crypto could pose to the economy. On the flipside, the Commerce Department will review how crypto could be used to boost U.S. competitiveness. That naturally elicits comparisons to the digital dollar proposal, which was also mentioned. The report said that “over 100 countries are exploring or piloting central bank digital currencies (CBDCs).”
3. The EO doesn’t talk about stablecoins, which have been assailed by various government leaders.
The EO does not mention stablecoins — and yeah, that’s weird. Mostly because stablecoins have been compared to “poker chips.” From what we can tell, stablecoin issuance is a hot button issue already. That’s why Treasury Secretary Yellen has already stated that Congress should introduce regulations in this area. However, not to see them in this EO is a little perplexing.
4. The government wants to know what kind of impact mining has on the environment.
Crypto mining is a cornerstone of Proof of Work (PoW) cryptocurrencies such as Bitcoin, Monero, and Ethereum (which will abandon it no later than 2023.) That’s one reason why the EO asks for a study on the environmental impacts of crypto mining.
5. Crypto companies were generally ok with the order. So were crypto traders.
Based on what we learned about this EO, combined with the two cents of industry leaders, crypto companies were mostly positive about what was outlined. As Vox put it, “the positives outlined by Biden outweigh the negatives.” This might be because the report admires that 40 million Americans, or 16% of the total population, have reported investing in or trading cryptocurrencies.