A representations of cryptocurrency Bitcoin placed on U.S. dollars in this illustration taken, January 24, 2022. REUTERS/Dado Ruvic/Illustration
March 8, 2022
By Andrea Shalal
WASHINGTON (Reuters) – U.S. President Joe Biden is expected to sign a long-awaited executive order this week directing the Justice Department, Treasury and other agencies to study the legal and economic ramifications of creating a U.S. central bank digital currency, a source familiar with the matter said on Monday.
The White House last year said it was considering a wide-ranging oversight of the cryptocurrency market – including an executive order – to deal with growing threat of ransomware and other cyber crime.
Biden’s order sets an 180-day deadline for a series of reports on “the future of money” and the role that cryptocurrencies will play in the evolving landscape.
“We could see a significant shift in policy in 180 days. This is a likely step toward creation of a central bank digital currency,” the source said, citing significant momentum behind such a move within the Biden administration.
However the reports being ordered could still raise concerns about such a move, or conclude that it would require congressional approval, the source cautioned.
The Biden order, likely to come on Wednesday, comes amid heightened concern about the use of cryptocurrencies by Russian elites to circumvent Western sanctions that have cut Russia off from large portions of the global economy, and moves by China and other economies to create their own cryptocurrencies.
The timing of the order was first reported by Bloomberg.
The Financial Crimes Enforcement Network (FinCEN) on Monday warned financial institutions to watch out for potential attempts by Russian entities to evade sanctions imposed by Washington over Moscow’s invasion of Ukraine.
Biden’s order will ask the Justice Department to look at whether a new law is needed to create a new currency, with the Treasury, Securities and Exchange Commission, Federal Trade Commission, Consumer Financial Protection Commission and other agencies to study the impact on consumers.
The forthcoming executive order could provide markets regulators with more ammunition to bring cryptocurrencies under their domain, analysts say.
The value of cryptocurrencies surged past $3 trillion last year, with approximately 14% of Americans invested in digital assets as of 2021, according to University of Chicago research. That has caught the attention of financial regulators, in particular, SEC Chair Gary Gensler, who last year called the crypto industry the “wild west” of finance. Gensler has told lawmakers that he wanted crypto exchanges to register with the SEC, similar to traditional securities exchanges.
Commodity Futures Trading Commission Chairman Rostin Behnam has also urged Congress to give his agency a leading role in regulating digital assets.
Other studies will be ordered on the impact of a cryptocurrency on competitiveness, the market and technical infrastructure needed, and the environmental impact of bitcoin mining, the source said.
U.S. Treasury Secretary Janet Yellen last year warned about an “explosion of risk” from digital markets, including the misuse of cryptocurrencies, but said new financial technologies could also help fight crime and reduce inequality.
(Reporting by Andrea Shalal in Washington; Additional Reporting by Hannah Lang and Katanga Johnson in Washington; Editing by Jonathan Oatis)