United States President Joe Biden is expected to issue an executive order on cryptocurrency policy this week, per a report by Yahoo Finance. The order will reportedly commission a study into the Central Bank Digital Currency (CBDC) or the ‘digital dollar’, which the US is currently working on. It will also task several agencies with the job of creating reports on the risks associated with cryptocurrency, such as its environmental impact, financial stability issues, payment system hurdles, among other things.
News of this executive order comes fresh off the heels of a Federal Reserve report that detailed the impact of the CBDC on the economy. And the forthcoming directive will commission several federal agencies to assess the impact of crypto and CBDC further.
The Departments of Treasury, State, Justice and Homeland Security are tasked to evaluate payment systems, environmental impact, and financial stability issues associated with cryptocurrencies.
The Office of Science and Technology will also be directed to develop an evaluation that details the support structure required to create a CBDC. The office is also supposed to submit a comprehensive report on distributed ledger technology within 180 days, with a secondary report on its impact on the environment in 545 days.
As a continued effort to damp down the plethora of scams associated with crypto, The Federal Bureau of Investigation (FBI) has been tasked to form a special unit led by veteran computer crime prosecutors to clamp down on criminal activity in this sector.
The Financial Stability Oversight Council (FSOC) has been asked to study the potential risks that arise from digital assets. The FSOC has also been tasked to look into the systematic risks of stablecoins by the President's Working Group on Financial Markets.
Other agencies like FTC and Consumer Financial Protection Bureau have been asked to work with the Attorney General to evaluate the impact of the growing digital asset industry on market competition. The CFTC, SEC, Federal Reserve, FDOC and OCC have also been tasked with creating market protection measures within their respective jurisdictions.
The executive order will also detail measures to protect individual investors, consumers, and businesses from cryptocurrency risks. The treasury will work with the SEC and the Commodities Futures and Trading Commission to develop a report detailing protective measures against cryptocurrency risks.
The executive order is also rumoured to have a coordination plan with countries worldwide to standardise rules and regulations for the crypto industry at large. The state department, treasury and commerce department, and USAID will create a broad framework for international and interagency engagement with countries to enhance the adaption of digital assets.
The White House seems to be putting a more concerted effort towards the CBDC as various countries have already set up a framework for their own. But the biggest competition for the US seems to be from China, which has already onboarded millions for using its digital yuan. This could significantly weaken the dollar's dominance in the world.
There have been no hints of what taxation rules will be implemented in the executive order as of now.
"What the administration would do is crackdown on Coinbase and others and use regulations to make it so onerous for the exchanges, especially if Biden is going to call it a matter of national security," speculates Vladimir Signorelli, founder of investment research firm Bretton Woods Research and a Bitcoin investor. "If they increased taxes, treated it differently, it would be unfortunate. It would be terrible", he told Forbes.