The U.S. wants to achieve "technological leadership in this rapidly growing space" and support innovation — and Janet Yellen believes these measures could benefit consumers and businesses.
Joe Biden has signed an executive order "to establish the first-ever comprehensive federal digital assets strategy for the United States," the White House has confirmed.
The long-awaited move aims to "promote responsible innovation in the digital assets space" — protecting investors, safeguarding national security interests, and contributing to economic growth.
In a statement, the National Economic Council's director Brian Deese and national security advisor Jake Sullivan acknowledged that there had been shortfalls with the approaches taken in the past, saying:
"We are clear-eyed that 'financial innovation' of the past has too often not benefited working families, while exacerbating inequality and increasing systemic financial risk. This history underscores the need to build robust consumer and economic protections into digital asset development."
A fact sheet released by the White House points to surveys that suggest about 16% of adult Americans — 40 million people — have invested in, traded or used cryptocurrencies. Meanwhile, 100 countries are exploring or piloting central bank digital currencies, with China especially ahead of the curve as it puts the finishing touches to the digital yuan.
Despite accusations that the U.S. has been dragging its heels on the issue of digital assets — with crypto businesses repeatedly calling for clarity after their activities were shoehorned into decades-old regulations — the White House said:
"The United States must maintain technological leadership in this rapidly growing space, supporting innovation while mitigating the risks for consumers, businesses, the broader financial system, and the climate. And, it must play a leading role in international engagement and global governance of digital assets consistent with democratic values and U.S. global competitiveness."
Six Main Priorities
As previously reported, the executive order tasks multiple government departments to work together in setting out their recommendations for how digital assets should be regulated. They are also being asked to determine whether a digital dollar should be created.
The White House wants measures that will protect American consumers, investors and businesses by ensuring there is "sufficient oversight and safeguards against any systemic financial risks posed by digital assets." Another priority includes limiting the "illicit finance and national security risks" associated with the criminal use of cryptocurrencies. The Department of Commerce is being directed to work across the government to build a framework that "drives U.S. competitiveness and leadership in, and leveraging of, digital asset technologies."
In a nod to the sizable number of Americans who are unbanked or underbanked, the executive order also aims to promote "equitable access to safe and affordable financial services" — describing this as in the national interest. Meanwhile, the executive order aims to "support technical advances and ensure responsible development and use of digital assets," with privacy, security, combating illicit exploitation and reducing negative climate impacts the top priorities here.
On Tuesday night, the U.S. Treasury Department inadvertently published a statement about the executive order where Treasury Secretary Janet Yellen responded to these measures, and predicted they "could result in substantial benefits for the nation, consumers, and businesses."
Bitcoin has reacted positively to the announcement, not least because it appeared to strike a conciliatory tone. Indeed, Congress appears to have been more constructive and positive about digital assets in recent months too. Sam Bankman-Fried recently said he was expecting "hostility and grandstanding" when he attended a congressional hearing alongside other crypto executives, but was surprised by the "productive and helpful" approach adopted by lawmakers.
After starting midnight UTC on Wednesday at $38,737, Bitcoin had surged highs to $42,352 at time of writing at 1pm — up 9.33% in a little over 12 hours.