The White House’s Digital Assets Executive Order: The Short Version
I read the executive order memorandum and accompanying press call transcript, so you don’t have to. Here’s what you need to know.
The one sentence summary for the Truly Busy
The EO calls for the USA’s government to promote a Central Bank Digital Currency (CBDC), improve America’s digital assets innovation competitiveness, reduce volatility in digital asset markets, lower financial services prices, and eliminate or mitigate “illicit activities” (mostly money laundering and terrorism financing).
The Actual Summary
According to the Biden administration, the EO is a is a response to the “explosive growth” in digital assets, increased interest by sovereign powers in central bank digital currencies, and an interest in American technological leadership.
The measures focus on six key areas: consumer protection, financial stability, curbing illicit activity, U.S. technology leadership, financial inclusion, and responsible development. The EO directs various agencies to issue a final report and recommendations 180 days from now, on August 25, 2022.
Consumer protection: There’s a reason this was mentioned first, namely, that this is the administration’s priority. The Biden administration has two goals here: provide improved standardized reporting (to make sure you understand your risks) and understanding where traditional finance is failing to provide services which crypto provides (ok, boomers). There’s language indicating government agency involvement in helping businesses promote crypto adoption as an effort to level the playing field between whales and new comers.
Financial stability: The idea here is to analyze how the various government alphabet agencies can help reduce volatility. quoting the price pre-covid (10,300), November 2021 (70,000) and currently (38,000). Using this as a benchmark he wants government agencies to educate more people including themselves on the causes of volatility (*ahem* pump and dumps *cough*) and how increased education and adoption properly channeled would counter volatility.
Illicit uses: The EO highlights the term “ illicit finance” in some capacity 24 times in the document, mostly in the context of money laundering, theft, and countering the financing of terrorism (to absolutely no one’s surprise). There’s also some indication investigation division funding at the DOJ and FBI will be increased. Primarily, the Biden administration is putting lax enforcement governments on notice to step it up. Here’s the prize quote from section 2(c): “Illicit actors, including the perpetrators of ransomware incidents and other cybercrime, often launder and cash out of their illicit proceeds using digital asset service providers in jurisdictions that have not yet effectively implemented the international standards set by the inter-governmental Financial Action Task Force (FATF).” There’s no real discussion present of balancing privacy and enforcement.
Responsible Innovation: This section emphasizes that the United States has an interest in ensuring that it remains at the forefront of responsible development of digital assets, as well as some references to crypto as a job creator and innovation driver. The message here seems to be “we’d like blockchains to be made in America”. The choice quote references digital asset development which promotes “ democratic values; the rule of law; privacy; the protection of consumers, investors, and businesses; and interoperability with digital platforms, legacy architecture, and international payment systems”. There’s a specific nod to cryptocurrencies’ consensus mechanisms energy usage and resultant greenhouse gas emission, which means we’re likely to see increasing competition to reduce energy consumption among blockchain consensus mechanisms in the near future.
Financial Inclusion: Summarizes and references “future of money” publication by the Treasury as well as the future plans to evaluate the necessity of a “digital dollar” issued by the central banks, with the stated goal of reducing the cost of financial transfers. While there’s references to reducing consumer confusion and fear around crypto currencies, the main message here is simple: money transfer agents like Western Union will see a significant disruption in their businesses.
U.S. Leadership: I’ll quote the EO directly, from section 4(i): “Sovereign money is at the core of a well-functioning financial system, macroeconomic stabilization policies, and economic growth. My Administration places the highest urgency on research and development efforts into the potential design and deployment options of a United States CBDC.” The EO goes on to say in section 4(iii) that “Within 180 days of the date of this order, the Secretary of the Treasury, in consultation with the Secretary of State, the Attorney General, the Secretary of Commerce, the Secretary of Homeland Security, the Director of the Office of Management and Budget, the Director of National Intelligence, and the heads of other relevant agencies, shall submit to the President a report on the future of money and payment systems, including the conditions that drive broad adoption of digital assets.”
Taken together, the meaning is clear — the Biden administration wants the creation of, and a prominent role for, a US central bank digital currency (CBDC, they call it). Along with consumer protection, the push for a CBDC seems to the the primary thrust of this document, indicating it’s a matter of when, not if the Federal Reserve Bank will issue one. Are they going to burn the minting keys? I’ll let you decide. But the answer is no.
This is by no means exhaustive, and I’ve trimmed a number of other interesting additions for the sake of clarity and brevity, but there you have it. A final note: To better understand the ramifications of this Biden Administration EO, please join our discussion of its (two) most surprising aspects on Flourishing Live, broadcasting Friday, March 11, 2020 on both Twitch and YouTube .
