US Presidential Executive Order Calls for Consideration of a Central Digital Currency

A new executive order issued by US President Joe Biden calls on federal agencies in the United States to consider the implications of the dramatic growth of digital asset markets in the absence of proper regulation and urges them to consider launching a digital currency from the US central bank (CBDC).

The order aims to reduce the risks that digital assets could pose to the protection of consumers, investors and businesses; ensuring financial stability and the integrity of the financial system; fight and prevent crime and illicit financing; protect national security; create an appropriate framework for the exercise of human rights; promote access to safe and affordable financial services; encourage the responsible development and use of digital assets.

The term “digital asset” in the Order refers to any CBDC, other representations of value, or financial assets and instruments, which are used to make payments or investments or to transmit or exchange funds, which are represented in numerical form.

Among other things, the executive order directs the U.S. Secretary of the Treasury to take the following actions:

  • Submit a report on the future of payment systems, which will address the potential implications of a US CBDC on national interests, economic stability, and financial inclusion. The order also directs the United States Attorney General to provide, following the Treasury report, an assessment of any legislative changes necessary to issue a U.S. CBDC.
  • Submit a report on the risks and opportunities that the large-scale use and trade of digital assets may present for consumers, investors and businesses.
  • Develop a coordinated action plan to mitigate illicit finance and national security risks related to digital assets. This action plan should address the enforcement measures necessary to increase the compliance of financial service providers with relevant laws, including anti-money laundering (AML) and combating the financing of terrorism (CFT). ).
  • Establish a framework for liaison with foreign counterparts regarding adapting, updating and improving the adoption of global principles and standards regarding the transaction and use of digital assets.

CLICK HERE to read President Biden’s executive order on ensuring responsible development of digital assets.

Sylvia B. Polson