Biden’s Crypto Executive Order
The long-awaited executive order is applauded by the digital asset space.
President Biden called on various government agencies to look into key risks, benefits, and possibilities of digital assets. The order aims to establish the United States as a global leader in the space, with an emphasis on taking a unified approach for responsible regulation and innovation.
It was noted to be far more benign than what many had speculated. We are encouraged by the tone of the order, as many in the digital asset space are: Cameron Winklevoss, founder of Gemini, tweeted:
Why the love? As Jeremy Allaire, CEO of Circle, wrote, “this is a watershed moment for crypto, digital assets, and Web 3, akin to the 1996/1997 whole of government wakeup to the commercial internet.” (source)
Key Objectives from the Order
The order lays out priorities around competitiveness, security, and regulation, some of which are described below.
Effective consumer protections
The administration called upon the Treasury to assess and create clear policy recommendations around crypto. This is in an effort to protect investors from being subject to scams or cyberattacks. The order wants regulators to “ensure sufficient oversight and safeguard against any systemic financial risks posed by digital assets.”
Environmental Impacts
Digital assets, especially bitcoin, have a bad reputation for high energy costs. The order pushes agencies to explore how to make crypto innovation more responsible to reduce climate impacts.
Responsible Innovation
The White House made it clear that it wants to find a competitive edge over other countries, especially since China’s ban on cryptocurrencies.
Currently, the uncertain regulatory environment has pushed many digital asset companies abroad. The agencies are tasked with producing recommendations on how to drive competitiveness and leadership around digital asset technologies.
SEC Chair Gary Gensler wrote on Twitter that the rise of digital assets is an opportunity to reinforce America's leadership in the global financial system and in technology.
Further Notes
The order makes no statement confirming a CBDC (Central Bank Digital Currency) but is placing the “highest urgency” on researching infrastructure and development needs.
One key omission from the order was any mention of stablecoins or the word “bitcoin”. Secretary Yellen has talked about how she wants to see regulation come from Congress for the stablecoin sector.
The agencies directed to oversee the priorities are the Treasury Department, which will work with the SEC, the FTC, and Commodities Trading Commission, the Justice Department, which will oversee legislation for a possible CBDC, and the Office of Science and Technology Policy, which will do research on the technical considerations for a CBDC.
Congressional action to regulate stablecoin issuance and oversee their reserves could come as soon as this month. The leading recommendation is that stablecoin issuers must be federally insured deposit institutions, aka banks.
Key Takeaways
The executive order on crypto shows that bitcoin and other digital assets are here to stay. There is a lack of direct action from Biden’s order, but each agency will have 120-210 days to create requested reports.
Overall, we view this as an embrace of technology and opening up of dialogue. The government recognizes it as a legitimate asset class, but understands balance is needed: the order will look across a broad spectrum to understand the space. Every crypto investor should be on the lookout for stablecoin regulation coming out sooner than any results from this executive order.
The order mentions the following stats:
Digital asset market capitalization grew from $14 billion to $3 trillion in five years
16% of American adults or 40 million people have invested in cryptocurrencies
Over 100 countries are exploring Central Bank Digital Currencies (CBDCs)
Additional Resources:
Cameron Winklevoss’s Twitter thread on the executive order.
White House press release from Secretary of the Treasury Janet Yellen.
CNBC’s summary of the order.
White House Fact Sheet outlining the order.
TIME report on the excitement around the executive order.
➡️ About FirstWatch Crypto ⬅️
FirstWatch Crypto was started by Dan McGlinn (@DigitalDanMcG) and John "Blaize" Hrabrick (@blaizebitcoin) who have been investing in the space for a combined 8 years. FirstWatch Crypto is on a mission to simplify the crypto investment landscape.