Despite the potential of a delay due to the ongoing and far-reaching impacts of the Russia-Ukraine Conflict, a very important pivotal presidential action is expected by President Joe Biden this week.
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 (CFTC) 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.
- Efforts are underway in the House and the Senate to regulate stablecoin issuers and oversee reserves
- The escalating conflict in Ukraine has led lawmakers to question how a CBDC might work in the US
As stablecoins and their reserves have been increasingly scrutinized, bills designed to regulate the digital assets will likely be introduced by US lawmakers this month, according to a source familiar with the matter.
Different versions of the bill are expected to be rolled out in the House and Senate this month, the person said. The source was granted anonymity to discuss private information.
Both the House and Senate heard from Jean Nellie Liang, the under secretary for domestic finance at the Department of the Treasury, in February to discuss a recent report on stablecoins from the President’s Working Group on Financial Markets (PWG).
The PWG and Liang recommended that stablecoin issuers must be federally insured depository institutions — more commonly known as banks. More Democrats are starting to disagree with the guidance, the person said, but the upcoming bills, some of which will be bipartisan efforts, will center around creating rules for stablecoin reserves.
“There seems to be a bipartisan consensus that Congressmen want to prevent another situation like Tether, the stablecoin known as USDT that has been subject to enforcement actions and scrutiny from regulators for holding only a small portion of its reserves in US dollars,” said Ron Hammond, director of government affairs for the Blockchain Association. “The bills may include measures requiring stablecoin issuer audits and clearer guidelines about what assets can make up reserves and whether banks or nonbanks can issue stablecoins.”
The move comes after Rep. Josh Gottheimer, D-N.J.,revealed in February an early draft of legislation aiming to classify certain stablecoins as “qualified” if consumers can redeem the digital currency on a one-for-one basis with US dollars.
Recent concerns over Russia’s central bank digital currency (CBDC), which is currently in pilot, and Canada’s freezing of crypto addresses have lawmakers rethinking the risks associated with a US CBDC, the person added. It’s not the first time lawmakers have questioned the role a CBDC might play in the current financial landscape.
In January, during Federal Reserve Chair Jerome Powell’s testimony before the Senate Banking Committee, Sen. Pat Toomey, R-Pa., questioned whether a Fed digital dollar would be able to exist alongside a “well-regulated, privately issued stablecoin.” Powell, who previously argued that a CBDC would render private stablecoins obsolete, assured Toomey the two are not mutually exclusive.
While efforts to draft bills related to stablecoins have been in the works for some time, the escalating situation in Ukraine may delay future progress. One lawmaker’s office has already put their stablecoin work on hold, the person said.
-Via this sourced site #1: Biden To Unleash The Crypto Floodgates With “Regulated Bitcoin” | Stablecoin vs Bitcoin – Who Wins?
-Via this sourced site #2: Congressional Action on Stablecoins Could Come as Soon as This Month
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