U.S. President Joe Biden is likely to sign an executive directive on cryptocurrency regulation this week, as per a report by Yahoo Finance. The executive action is expected to unify the government’s regulatory mechanism for digital assets into a cohesive unit across different federal agencies.
According to a government official, the plan-of-action includes commissioning a study of cryptocurrency regulation and the feasibility of issuing a central bank digital currency (CBDC). The study will touch upon various implications of cryptocurrency usage amid increasing concerns over economic and national security-related risks.
Agencies and functions
Under the directive, a multitude of federal agencies will seek to reform the regulatory landscape for digital assets in-sync with their oversight duties.
- Payment Methods: The Departments of Treasury, State, Justice and Homeland Security are tasked with preparing a report on the future of digital payment systems.
- Infrastructure: The Office of Science and Technology Policy (OSTP) is evaluating the infrastructure that will be needed to back a CBDC. The OSTP will also create a report on distributed ledger technology within 180 days of the directive and an update focusing on environmental impact in 545 days.
- Durability: The Financial Stability Oversight Council will focus on the long-term threats to economic stability concerning digital assets and systemic risks posed by collateralized cryptocurrencies such as stablecoins.
- Fair Play: The Federal Trade Commission (FTC) and the Consumer Financial Protection Bureau (CFPB) are partnering with the Attorney General to probe the consequences of the growth of digital assets on market competition.
- Guidelines: The President’s task force has also ordered various federal agencies to assess market protection measures within their jurisdictions. The organizations include the Securities Exchange Commission (SEC), Commodity Futures and Trading Commission (CFTC), Federal Reserve, Federal Deposit Insurance Corporation and Office of the Comptroller of Currency.
- Safeguards: The Treasury Department, SEC and CFTC are responsible for setting up checks and balances to protect consumers, investors and businesses. The measures would help in curbing volatility and malpractices arising due to cryptocurrencies.
- Privacy: The FTC’s Chairman and the CFPB’s Director will address potential privacy and ownership issues. Such situations frequently come up while transacting digital assets on exchanges and platforms.
- Standardization: The Departments of Treasury, State and Commerce along with USAID will develop a framework for international collaboration with foreign agencies and governments. The initiative aims to introduce universal norms for cross-border dealings and cryptocurrency regulations.
The U.S. government allegedly postponed issuing the executive action in January this year due to reported differences between White House and Treasury officials over provisions related to CBDC. The directive for cryptocurrency regulation could be delayed further due to the ongoing Ukraine crisis.