President Joe Biden has signed an executive order directing the Treasury Department to study the impact of cryptocurrency on financial stability and national security. The order also urges the Federal Reserve to explore whether the central bank should create its own digital currency. According to a White House fact sheet on the order, it outlines “the first ever, whole-of-government approach to addressing the risks and harnessing the potential benefits of digital assets and their underlying technology.”
“The Order lays out a national policy for digital assets across six key priorities: consumer and investor protection; financial stability; illicit finance; U.S. leadership in the global financial system and economic competitiveness; financial inclusion; and responsible innovation,” the White House said in the fact sheet. In a joint statement, NEC Director Brian Deese and National Security Advisor Jake Sullivan added “the approach outlined in the E.O. will reinforce U.S. leadership in the global financial system and safeguard the long-term efficacy of critical national security tools like sanctions and anti-money laundering frameworks.”
Biden’s executive order comes as cryptocurrency has been exploding in popularity.
“Digital assets, including cryptocurrencies, have seen explosive growth in recent years, surpassing a $3 trillion market cap last November and up from $14 billion just five years prior,” the White House said in the fact sheet. “Surveys suggest that around 16 percent of adult Americans – approximately 40 million people – have invested in, traded, or used cryptocurrencies.”
Most recently, Russians have been turning to crypto as a way of ditching the rubleamid sanctions over Russia’s invasion of Ukraine. Trading volume between the ruble and Bitcoin spiked to a 9-month high last week, according to cryptocurrency researcher Kaiko. Multiple lawmakers have asked the Treasury Department to provide information on how it intends to inhibit cryptocurrency use for sanctions evasion. The Biden administration argued Russia won’t be able to make up for the loss of U.S. and European business by turning to cryptocurrency.
“I will say, on Russia, in particular, the use of cryptocurrency we do not think is a viable workaround to the set of financial sanctions we’ve imposed across the entire Russian economy and, in particular, to its central bank,” a senior Biden administration official said in a background call on the executive order. “The administration will continue to aggressively combat the misuse of cryptocurrency, including the use of it to evade U.S. sanctions.”