President Biden’s executive order not a crypto killer

President Biden signed an executive order Wednesday on cryptocurrencies specifically and on digital assets in general. The order was refreshingly anodyne: it is chiefly a call for research by the various affected agencies of the federal government.

The markets have long been aware that an order on this subject was coming. In fact, there was some speculation that the order would be aimed at the presumed utility of cryptocurrencies for criminals who need their money laundered, and even that it might have a geopolitical element, seeking to head off the use of cryptos by Russian financial institutions to evade sanctions.

The matriarch of the family, Bitcoin, reached $44,000 on March 1. But in part under the influence of speculation about a coming order, Bitcoin felI to below $38,000 on Monday, March 7. This was a case of “sell on the rumor, buy on the news.” Relief that the Biden order does not actually look like a crackdown against the asset class fueled a bit of a rally on Wednesday, with bitcoin rising to $42,280 by midday, but by early Thursday it was down to $39,280.

Biden’s order does the following:

  • Directs the Department of the Treasury to “assess and develop policy recommendations to address the implications of the growing digital asset sector…” asking regulators to ensure that there are safeguards against any systemic financial risks any such assets may pose.
  • Encourages the Financial Stability Oversight Council to identify systemic financial risks and develop appropriate policy recommendations.
  • Directs all relevant governmental agencies to work with the country’s allies and partners to ensure international frameworks are aligned and responsive to risks. The Assistant to the President for National Security Affairs and the Assistant to the President for Economic Policy shall coordinate this effort. 
  • Instructs the Department of Commerce to establish a framework to drive U.S. competitiveness and leadership in this field, a framework that will provide for the leveraging of digital asset technologies.
  • Asks the Secretary of the Treasury to produce a report within 180 days on the future of money and payment systems, “to include implications for economic growth, financial growth and inclusion, and national security….” 
  • Prioritizes privacy, security, and opposition to illicit exploitation, along with the reduction of negative climate consequences, as among the concerns to be incorporated into responsible development and design of digital assets, while at the same time urging further innovation and advance. For example, the order asks the Director of the Office of Science and Technology Policy to weigh in on “uses of blockchain that could support monitoring or mitigating technologies to climate impacts, such as exchanging of liabilities for greenhouse gas emissions, water, and other natural or environmental assets.”
  • Finally, the order asks the Federal Reserve to “continue its research, development, and assessment efforts for” a U.S. Central Bank Digital Currency (CBDC) that will prioritize U.S. participation in multi-country experimentation.

Christopher Faille

Christopher Faille has written on a variety of legal, regulatory, and financial issues for decades. He is the author of "The Decline and Fall of the Supreme Court" (1995), for example, and the coauthor, with David O'Connor, of "Basic Economic Principles" (2000). He was an early reporter with Lipper HedgeWorld and has contributed to Forbes and to the Hedge Fund Law Report.

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