U.S. Executive Order Provides Framework for Cryptocurrency

[ad_1]

At the end of last year, the cryptocurrency market’s worth rose above $3 trillion. Despite crypto being notoriously volatile, it’s clear it is gaining massive popularity. It even gained during the COVID pandemic. Fortune Business Insights reports the crypto market witnessed a “positive demand shock” across all regions during the pandemic, exhibiting a 10% higher year-on-year growth in 2020 compared to the 2017-2019 period.

With growth often comes regulation. There are now thousands of types of cryptocurrencies, hundreds of cryptocurrency exchanges, and millions of people participating in the craze—it’s an ever-evolving beast, and many are calling for more rules to keep the beast under control. The U.S. government recently took steps toward regulating the cryptocurrency market. What does this mean for the future of digital currencies and assets?

In March, President Biden signed an Executive Order that outlines the first, whole-government approach to “addressing the risks and harnessing the potential benefits of digital assets and their underlying technology.” The order aims to protect consumers, financial stability, national security, address climate risks, and put the U.S. in a leadership position for engaging with and governing digital currencies and economies.

For instance, the Executive Order calls for the Dept. of the Treasury to develop policy recommendations that consider and address the implications of the growing digital asset sector and associated changes in financial markets. It encourages the Financial Stability Oversight Council to identify financial risks to the economy and develop policy recommendations that address regulatory gaps. The order calls for coordinated action across government agencies to mitigate risks associated with the illicit use of digital assets, and it calls for a framework that will help drive U.S. competitiveness in leveraging digital assets and supporting the technological advances that will enable continued growth of the digital asset ecosystem.  

Importantly, the Executive Order also demonstrates the Biden Administration’s interest in exploring a digital version of the U.S. Dollar. The order calls for urgent R&D (research and development) efforts toward a CBDC (central bank digital currency), along with an assessment of the technological infrastructure that would support it.

The U.S. Federal Reserve has released reports on this topic, including “Money and Payments: The U.S. Dollar in the Age of Digital Transformation” in January. The report suggests a CBDC would need to provide benefits to households, businesses, and the overall economy that exceed any costs and risks; yield such benefits more effectively than alternative methods; complement, rather than replace, current forms of money and methods for providing financial services; protect consumer privacy; protect against criminal activity; and have broad support from key stakeholders. The Federal Reserve said it’s soliciting and reviewing opinions of stakeholders in its ongoing efforts to assess whether a U.S. CBDC would be appropriate and plausible.

The Executive Order on cryptocurrency is timely; it comes on the heels of the COVID pandemic, where crypto grew even as the overall economy shrunk, and amid global tensions in Eastern Europe. The emerging risks and opportunities of cryptocurrencies call for an up-to-date, whole-government strategy, and the order not only sets the strategy but also puts “urgency and purpose” behind it. Additionally, the current geopolitical instability due to Russia’s invasion of Ukraine certainly seems to be prompting the U.S.’s drive to be a cryptocurrency leader in the international community.

Want to tweet about this article? Use hashtags #IoT #sustainability #AI #5G #cloud #edge #digitaltransformation #machinelearning #infrastructure #blockchain #cryptocurrency #crypto #digitalcurrency #financial #digitalasset

[ad_2]

Source link

Leave a Reply

Your email address will not be published.