US President Biden is expected to release a crypto-related executive order this week according to the latest reports.
The executive order (EO) will direct government agencies to begin examining various areas of the cryptocurrency landscape in order to develop a regulatory framework.
According to reports, the executive order would empower the US Treasury, State Department and Office of the Attorney General to investigate the possibility of launching a Central Bank Digital Currency (CBDC) issued by the Federal Reserve.
Biden’s policy comes at a time when The US’ neighbour, Canada’s Trudeau has turned on citizens, freezing bank accounts and crypto crowd funding in the face of growing freedom protests across the country.
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US Government Agencies involved
Various agencies will be tasked to produce reports on the future of money and payment systems, including the Departments of the Treasury, State, Justice and Homeland Security.
The Financial Stability Oversight Council (FSOC) will examine market stability that may arise from cryptocurrencies. According to the International Monetary Fund (IMF), crypto could pose a risk to countries’ financial stability. Specifically, the IMF is worried that it may no longer be relevant in a fast-developing digitised global economy that is no longer dependant on unpayable loans.
The Attorney General, the Federal Trade Commission (FTC), and Consumer Financial Protection Bureau will look into crypto growth and how that could impact competition. The FTC has issued warnings about certain investment schemes.
Meanwhile, the Security and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC), the Federal Reserve, the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC) will consider market protection schemees within their respective jurisdictions. The SEC Chairman Gary Gensler is working with the CFTC or regulating the space, focusing on investor protection.
Notably, the SEC has repeatedly thwarted spot-based bitcoin ETFs, yet simultaneously allowed riskier futures-based bitcoin ETFs, funnelling investors to use a financial product that may not be in their best interest from a risk-based perspective.
The Treasury Department will look into compiling a report on how to protect against risks from cryptocurrencies in consultation with the SEC, CFTC, and federal banking agencies.
The executive order will purportedly also address stablecoins, privacy and distributed ledger technology (DLT).
The Federal Bureau of Investigation (FBI) last week launched a new unit to tackle crypto exploitation, and the Department of Justice (DOJ) brought in its first director for its National Cryptocurrency Enforcement Team.
According to a member of the Financial Sability Board (FSB) Robert Ophele, the US government is “going full steam” on crypto regulation.
The current structure is no longer fit for the purpose with the development of cross-border digital market activities, he stressed.
The upcoming EO is set to include all major US bureaucracies.
US Friend or Foe to Crypto?
It remains to be seen whether Biden will take a friendly or abrasive approach to the cryptocurrency sector with this EO. The approach may dictate whether the United States will cede territory in financial technology, entrepreneurship and innovation to countries that adopt the Bitcoin standard, like El Salvador.
Just last week, Trudeau’s Canada invoked emergency powers that criminalised innocuous activities which include crypto crowdfunding, giving the government the power to arbitrarily freeze bank accounts at will. The country’s dark turn has drawn widespread criticism and comparisons to communist China, all the while highlighting the need for financial privacy in the face of overreaching tyrannical regimes like Canada, Venezuela or China.
The question is: which path will the United States take?
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