Digital Assets The US starts to walk the walk
14 March 2022
U.S. President Joe Biden has signed an Executive Order on ensuring the responsible development of the digital assets. The Order contains further detail on a U.S. Central Bank Digital Currency, as well as other measures. It follows considerable growth in the digital assets sector. The cryptoassets sector is now said to be worth more than $3 trillion and approximately 40 million Americans have invested in, traded, or used cryptocurrencies. Over 100 countries, including the UK, are also exploring Central Bank Digital Currencies (see our briefing for further details). It also follows a report of an updated assessment by the FSB on the risks posed to financial stability by the cryptoassets sector.
The Order aims for a holistic approach and sets out a national policy for digital assets across six key priorities.
Key measures
- Protect U.S. consumers, investors, and businesses: The Department of the Treasury and other agency partners are directed to develop policy recommendations to address the implications of the digital assets sector and changes in financial markets for consumers, investors, businesses. Regulators will also be encouraged to ensure sufficient oversight against any systemic financial risks posed by digital assets.
- Protect U.S. and global financial stability and mitigate systemic risk: The Financial Stability Oversight Council must identify and mitigate economy-wide (i.e., systemic) financial risks posed by digital assets and develop appropriate policy recommendations.
- Mitigate the illicit finance and national security risks posed by the illicit use of digital assets: All U.S. Government agencies are to mitigate risks and will be expected to work with allies to ensure that international frameworks and partnerships can address risks.
- Support technological advances and ensure responsible development and use of digital assets: The U.S. Government is to look at the responsible development, design and implementation of digital asset systems.
- Exploring a U.S. Central Bank Digital Currency (CBDC): The Order directs the U.S. Government to look into technological infrastructure and capacity needs for a potential U.S. CBDC. The Federal Reserve is also encouraged to continue its work on the CBDC.
