White House launches comprehensive plan for cryptocurrency regulation

White House / Flickr

President Biden is poised to issue a new comprehensive strategy for the federal government’s treatment of cryptocurrency, the White House announced on Wednesday. The White House described the pending executive order as “the first ever, whole-of-government approach to addressing the risks and harnessing the potential benefits of digital assets and their underlying technology.”

“The rise in digital assets creates an opportunity to reinforce American leadership in the global financial system and at the technological frontier,” the White House said in a release describing the order, “but also has substantial implications for consumer protection, financial stability, national security, and climate risk.”

Among other measures, the order will direct the Commerce Department to develop a comprehensive framework “to drive U.S. competitiveness and leadership in, and leveraging of digital asset technologies,” per the release. The order also encourages the Federal Reserve’s ongoing research into a US-backed cryptocurrency, sometimes called a “digital dollar.”

News of the order was first reported by Bloomberg earlier this week.

Regulators have been calling for a coordinated regulatory response since at least last year, in part because of the many disparate agencies affected. Consumer banking, investments and sanctions enforcement are all handled by separate arms of the federal government and all touch on cryptocurrency in different ways.

The order will not have any immediate effect on how cryptocurrency is regulated or how cryptocurrency businesses operate, and will instead set in motion a slower regulatory process that will take years to bear fruit. In particular, the order directs agencies — including the Treasury Department and Securities and Exchange Commission — to assess risks and opportunities involved in cryptocurrency use, which will likely result in future regulations issued through the notice-and-comment process.

The industry’s early reaction to the order has been positive, seeing the new framework as a way to avoid regulatory uncertainty. “Crypto holders, businesses, and exchanges are still walking blindfolded through a fractured regulatory environment,” said Chamber of Progress’s Adam Kovacevich in a statement, “and this order will hopefully push regulators to publish clear rules for everyone to follow.”