Biden orders government to study digital dollar, other cryptocurrency risks
The Biden administration sees cryptocurrency’s explosive popularity as a call to act quickly to assess its risks and benefits.
President Joe Biden is signing an executive order on government oversight of cryptocurrency, urging the Federal Reserve to investigate the possibility of the central bank creating its own digital currency.
According to a senior administration official who previewed the order on the condition of anonymity, the Biden administration sees the explosive popularity of cryptocurrency as a call to act quickly to examine the risks and benefits of digital assets.
The Treasury Department and other federal agencies will conduct research on the impact of cryptocurrency on financial stability and national security as part of the order signed on Wednesday.
Last week, Treasury Secretary Janet Yellen stated that “many participants in cryptocurrency networks are subject to anti-money laundering sanctions,” and that the industry is not “completely one where things can be evaded.”
Concerning the Federal Reserve’s involvement with digital assets, the central bank stated in a January paper that a digital currency “would best serve the needs” of the country through a model in which banks or payment firms create accounts or digital wallets.
Some digital currency users welcome the prospect of increased government involvement in crypto.
Wide-ranging oversight of the cryptocurrency market, which surpassed US$3 trillion in November, is critical to ensuring US national security, financial stability, and competitiveness, as well as combating the growing threat of cyber- crime, according to officials.
Analysts see the long-awaited executive order, first reported on Monday (Mar 7), as a stark acknowledgement of cryptocurrencies’ growing importance and the potential consequences for the US and global financial systems.
One of its key measures directs the US government to assess the technological infrastructure required for a potential US Central Bank Digital Currency (CBDC) – an electronic equivalent of dollar bills in your pocket.
The US Federal Reserve referred the question of whether the US should pursue a digital dollar to Congress in January, prompting analysts to predict that such a project would take years.
