On March 9, President Biden will sign a long-awaited executive order instructing federal agencies to study various impacts of cryptocurrency use. The order will task regulators with reviewing risks to consumers, investors, and the economy at large. Following the study period, which will be ongoing for several months, federal agencies will prepare reports based on their findings. The White House will then use those findings in any new regulatory actions in the future.
The cryptocurrency market has grown to about $1.75 trillion in value in the span of just over a decade. Roughly 40 million adult Americans have participated in the digital currency market in some way, making this no longer a space for niche investors.
- President Biden's March 9 executive order will task federal agencies with considering the impact of cryptocurrencies on U.S. sanctions, the environment, and other areas of concern.
- Federal agencies will report findings to the White House in the coming months, with additional regulatory measures potentially to follow.
- The order aims to support innovation while stemming risks to the individual investor, to businesses, and to the broader economy.
- The order will also formally launch an investigation into the possible launch of a Federal Reserve-backed U.S. digital currency.
Concerns About Sanctions, Environmental Impact
In a Treasury Department statement issued ahead of the executive order, Treasury Secretary Janet Yellen said that the order will facilitate responsible innovation in the cryptocurrency space and will also address risks. President Biden's administration is expected to study how digital currencies may negatively affect U.S. sanctions and anti-money laundering efforts. These issues have become especially prominent in recent weeks as the U.S. has imposed sanctions on Russia following the latter's invasion of Ukraine.
The order will also launch a study of the environmental and climate impacts of cryptocurrency mining. The mining process is notoriously energy-intensive in many cases.
Exploring a Possible U.S. Digital Currency
The order will also formalize an exploratory process to consider the launch of a possible U.S. digital currency. A growing number of countries have launched central bank digital currencies (CBDCs), digital tokens that are backed by the government. Among other things, the order will instruct the Department of Justice to study whether Congress would need to authorize such a token.
Bitcoin's (BTCUSD) dollar value spiked by about 8% in the hours surrounding the issuing of the executive order.