Biden to direct federal agencies to study crypto impacts

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On March 9, President Biden will sign a long-awaited executive order directing federal agencies to study various impacts of cryptocurrency use. The order will instruct regulators to look at the risks to consumers, investors and the economy as a whole. After the study period, which will last several months, federal agencies will prepare reports based on their findings. The White House will then use these results in any further regulatory action in the future.

The cryptocurrency market has grown to around $1.75 trillion in value in just over a decade. About 40 million American adults have participated in the digital currency market in some way, making it more of a space for niche investors.

Key points to remember

  • President Biden’s March 9 executive order will direct federal agencies to review the impact of cryptocurrencies on US sanctions, the environment, and other areas of concern.
  • Federal agencies will report their findings to the White House in the coming months, with additional regulatory action likely to follow.
  • The ordinance aims to support innovation while limiting the risks for the individual investor, companies and the economy in general.
  • The order will also formally launch an investigation into the possible launch of a Federal Reserve-backed U.S. digital currency.

Concerns about sanctions and environmental impact

In a Treasury Department statement released ahead of the executive order, Treasury Secretary Janet Yellen said the executive order will facilitate responsible innovation in cryptocurrencies and also address risk. President Biden’s administration should study how digital currencies can negatively affect US sanctions and anti-money laundering efforts. These issues have become particularly important in recent weeks as the United States imposed sanctions on Russia following the latter’s invasion of Ukraine.

The command will also launch a study on the environmental and climate impacts of cryptocurrency mining. The mining process is notoriously energy intensive in many cases.

Exploring a possible US digital currency

The order will also formalize an exploratory process to consider the launch of a possible US digital currency. A growing number of countries have launched central bank digital currencies (CBDCs), government-backed digital tokens. Among other things, the order will instruct the Justice Department to consider whether Congress would need to authorize such a token.

The dollar value of Bitcoin (BTCUSD) rose about 8% in the hours surrounding the issuance of the executive order.

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