50
21 March 2022: The Biden Administration in the United States recently released an executive order pertaining to "digital and distributed LEDGER technology for financial services (i.e. cryptocurrencies). This executive order outlined regulatory practices the United States intends to implement regarding technologies a part of the cryptoeconomy
As one the world's dominant economic superpowers, the potential actions of the United States in resposne to cryptocurrency / blockchain technologies is of utmost importance. This article will break down the key items to know in the latest White House Executive Order
Top Things to Know:
- United States looks to immediately explore ways in which to develop & launch a central bank digital currency (CBDC)
- White House cites "[reinforcing] United States leadership in the global financial system" as key driver behind actions
- The US is gearing up to obtain market share in the stablecoin cryptocurrency market as an interoperable US-CBDC
Moose & Marsha Handcrafted Goods
The Breakdown
On 9 March 2022, United States President Joe Biden released an executive order on a cryptocurrency regulation strategy. The document outlined core motivations surrounding the executive order, including the acknowledgement that distributed ledger technologies & digital assets have seen parabolic growth in the past several years.
In November 2021, non?state issued digital assets reached a combined market capitalization of $3 trillion, up from approximately $14 billion in early November 2016
The expansion of the digital asset market up to a high of $3 trillion USD is a 21,000% increase over a span of six years. With such a rapid pace of growth, the United States felt the need to immediately address the developing industry through a comprehensive breakdown of the following:
- Policy Objectives
- Coordination of Said Objectives
Policy Objectives of New US Crypto Regulation
President Biden lists a number of different objectives the executive order is to address. The theme of the regulation is centered around three essential points:
- Overseeing the development of the digital asset industry
- Protecting US consumers, businesses, and economic interests
- Supporting internal technological innovation to "reinforce" the US as a global leader in the global financial system
This executive order made it officially clear that the United States intends to become an authoritative figure within the cryptoeconomy. While specifics are not named, the document clearly states multiple examples in the objectives surrounded with the reduction in harmful, illegal, or malicious activities within the digital asset market.
The acknowledgement of both stablecoins (USDC, Tether, etc.) and already existing CBDCs (Bahamas, Nigeria, etc.) is the justification of the actions given in the Coordination section - the United States developing & launching its own CBDC.
Central Bank Digital Currency Tracker
The Specifics & Implications of a Coming US-CBDC
Speculation of a coming US-CBDC has been building for an extended period of time, especially heating up with remarks from the US Federal Reserve. Now with the passing of this executive order, the United States has a plan of execution to facilitate the research, development, and implementation of a central bank digital currency.
The US report includes specific analysis of the following:
- Potential US-CBDC implications on economic growth and stability, & financial inclusion
- Potential relationship between a CBDC and private sector-administered digital assets
- Future of sovereign and privately produced money globally
- Extent to which foreign CBDCs could displace existing currencies and alter the payment system in ways that could undermine United States financial centrality
- Potential implications for national security and financial crime
- Assessment of the effects that the growth of foreign CBDCs may have on United States interests generally.
A long number of US regulatory agencies are mentioned specifically in the report to be involved in this new regulation, including the Federal Reserve & Security Exchange Commission (SEC).
Stablecoin Market Cap - Statistica
The market cap of stablecoins has exploded since summer 2020 with the substantial expansion of assets like Tether, USD Coin, TerraUSD, and Maker's DAI token. The total market cap is estimated to be ~$180 billion USD as of Q1-2022.
The US Treasury Department in an earlier study has estimated that in 2018 US consumers & businesses made 174.2 billion transactions of which had a total value of $97.04 trillion. This showcases the potential market size in which digital currencies like stablecoins or CBDCs -whether US-based or not- could eventually eat into. This makes the development of a US-CBDC a high priority in the economic interest of the United States as it could alleviate any potential losses to sovereign digital currencies.
Because of the distributed nature of the cryptoeconomy, the rhetoric in this report suggests that the US feels the best way to counter digital assets is the enter the market, a key development as DeFi and peer-to-peer payment networks continue to evolve.
The US cryptocurrency regulations that passed in early March 2022 have outlined how the United States intends to enter the digital asset market. The makings of a US-CBDC token via the Federal Reserve is officially in the works and comes with three distinct objectives:
- Overseeing the development of the digital asset industry
- Protecting US consumers, businesses, and economic interests
- Supporting internal technological innovation to "reinforce" the US as a global leader in the global financial system
The entrance of the United States into the cryptoeconomy opens up digital assets to potentially tens of trillions of USD (US-CBDC after a currency conversion). This would immediately make digital assets far more obtainable to the average economic participant, though it comes with the influence of centralized governments.
Read the White House Executive Order Here
If you enjoyed this article, be sure to follow this page to be notified of our weekly postings
Use the QR codes below to tip in USD/BTC or send a tip through CoinTr.ee
Moose & Marsha Handcrafted Goods
