U.S. President Joe Biden on Wednesday signed an executive order on government oversight of cryptocurrency that urges the country’s central bank to explore whether it should jump in and create its own digital currency.
The order called for multiple government agencies to look into activities related to digital assets as the number of cryptocurrency trading platforms and service providers has increased in the last few years. Under the executive order, Biden directed Treasury Department and other federal agencies to study the impact of cryptocurrency on financial stability and national security.
The order noted that in November 2021, investment in digital assets in the U.S. reached a combined market capitalization of $3 trillion, up from approximately $14 billion in early November 2016.
In a separate survey by Pew Research Centre, 16% of the U.S. adults said they have invested in, traded or otherwise used one of the digital currencies. Overall, 86% of Americans say they have heard at least a little about cryptocurrencies, including 24% who say they have heard a lot about them.
Do sanctions hurt?
Biden’s order to federal agencies comes against the backdrop of the ongoing Russia-Ukraine conflict as lawmakers and officials are increasingly voicing concern that Russia may be using cryptocurrency to avoid the impact of sanctions imposed on its banks, oligarchs and oil industry due to the invasion of Ukraine.
Senator Elizabeth Warren is said to be preparing a bill to crack down on the use of cryptocurrency to avoid economic sanctions. Her proposed crypto bill may require local crypto exchanges to submit “detailed records” to the Treasury Department of customers‘ identities and transfers to private crypto wallets.
Some officials note that Biden’s order has been in the works for a few months, and that Russia won’t be able to make up for the loss of U.S. and European business by turning to cryptocurrency.
“Crypto’s really not a workaround for our [U.S.] sanctions,” Daleep Singh, a deputy national security and economic adviser to Biden, told CNN.
Last week, Treasury Secretary Janet Yellen said that several participants in the cryptocurrency networks are subjected to anti-money laundering sanctions, and that the industry is not “completely one where things can be evaded.”
But some academicians caution against the government’s embrace of digital assets.
This order “falls prey to techno-utopian notions that technology can solve deep-seated structural financial inclusion problems,” Hilary Allen, a financial regulation professor at American University, observed in a tweet. “Critical interrogation of crypto’s actual utility is needed before promoting it.”
