Biden signs executive order on digital assets

President Joe Biden on Wednesday signed an executive order outlining a federal digital assets strategy that aims to protect investors and foster innovation in the growing asset class.

The order establishes a national policy for digital assets across six areas: consumer and investor protection; financial stability; illicit finance; U.S. leadership in the global financial system and economic competitiveness; financial inclusion; and responsible innovation.

In part, the order directs the Treasury Department and other regulators to assess and develop policy recommendations on how the digital asset sector could impact financial markets for consumers, investors, businesses and equitable economic growth. It also encourages regulators to ensure sufficient oversight and safeguard against any systemic financial risks posed by digital assets, according to a White House fact sheet.

The order encourages the Financial Stability Oversight Council to identify and mitigate systemic financial risks posed by digital assets and to develop appropriate policy recommendations to address any regulatory gaps, the White House noted.

Moreover, the order directs the Department of Commerce to work across the federal government in establishing a framework "to drive U.S. competitiveness and leadership in, and leveraging of digital asset technologies," the fact sheet noted.

Brian Deese, director of the National Economic Council, and National Security Advisor Jake Sullivan said in a joint statement that the order marks an "intensification" in the federal government's efforts to promote responsible innovation in the digital assets space.

"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," Messrs. Deese and Sullivan said. "This history underscores the need to build robust consumer and economic protections into digital asset development."

To that end, the order informs the Treasury secretary to produce a report on the future of money and payment systems.

Separately, the government under the order will explore a U.S. central bank digital currency, a digital form of legal tender. The order directs the federal government to "assess the technological infrastructure and capacity needs for a potential U.S. CBDC in a manner that protects Americans' interests," according to the fact sheet. It also encourages the Federal Reserve to continue its research, development and assessment efforts for a U.S. central bank digital currency, including developing a plan for broader government action in support of their work.

The Fed in January released a report on the pros and cons of issuing a CBDC.

"The administration will continue work across agencies and with Congress to establish policies that guard against risks and guide responsible innovation, with our allies and partners to develop aligned international capabilities that respond to national security risks, and with the private sector to study and support technological advances in digital assets," the White House said in its fact sheet.