The directive could offer much-needed regulatory clarity for digital assets and preserve the US as a global leader in technological innovation.
The new executive order from US President Joe Biden could be a watershed moment for the crypto industry in the US, according to industry participants.
Biden signed the long-awaited directive on Wednesday that outlined the government’s approach to digital assets, calling on federal agencies to examine the risks and benefits of cryptocurrencies.
The measure aims to focus on six key areas: consumer protection, financial stability, illicit activity, US competitiveness, financial inclusion, and responsible innovation.
According to the Biden administration, the move is a response to the “explosive growth” in digital assets, the increasing number of countries exploring central bank digital currencies (CBDCs), and a desire to maintain US technological leadership.
While Biden hasn’t said whether the US will launch its own digital currency, he has called on the government to place an “urgency” on the research and development of a potential CBDC.
The Federal Reserve began working on exploring a digital dollar last year, and released a report on digital currencies in January.
‘Encouraging to the market’
The crypto industry had been hotly anticipating the order, which had been under development for months since its announcement in October.
Anticipation of a regulatory crackdown, along with rules requiring tougher scrutiny of digital transactions in Biden’s $1 trillion infrastructure bill, had prompted the crypto industry to beef up its lobbying presence on Capitol Hill.
However, the relatively light-touch approach of Biden’s directive was met with widespread relief from those in the industry.
“It was better than I thought it was going to be,” said Kristin Smith, executive director of the Blockchain Association, a Washington DC-based crypto industry group.
“Given all of the FUD [Fear, uncertainty, and doubt] that has been out there about a regulatory crackdown, I think this is obviously in stark contrast. This is much more positive and thoughtful.”
The effort to establish clarity on the regulatory framework “will definitely bring more confidence to investors and welcome more Americans into the crypto ecosystem,” said Thomas Hook, Bitstamp’s US chief compliance officer. “While crypto markets may continue to be volatile, today’s news shows that recognition from the Biden administration is encouraging to the market.”
That sentiment was echoed by the crypto market, which responded positively to the executive order at the close of trading.
Big players in the industry took to social media to share their thoughts on the order.
Sam Bankman-Fried, CEO of crypto exchange FTX and a major Biden donor, called it “constructive,” while Circle CEO Jeremy Allaire said it should be viewed as the “single biggest opportunity to engage with policy makers”.
The U.S. seems to be taking on the reality that digital assets represent one of the most significant technologies and infrastructures for the 21st century; it's rewarding to see this from the WH after so many of us have been making the case for 9+ years. (2/7)— Jeremy Allaire (@jerallaire) March 9, 2022
For Jerry Brito, the CEO of crypto think tank Coin Center, it's a clear message from the federal government that it views crypto as “a legitimate, serious, and important part of the economy and society,” adding that its “a good signal to serious people who’ve been holding back from getting involved.”
The message I take from this EO is that the federal government sees cryptocurrency as a legitimate, serious, and important part of the economy and society, and I think it’s a good signal to serious people who’ve been holding back from getting involved.— Jerry Brito (@jerrybrito) March 9, 2022
Privacy tech strategist and advisor Lourdes Turrecha said the order struck a “sensible balance between various US policy interests,” and highlighted the importance of privacy which had been largely missing in developing Web 3.0 technologies like crypto and blockchain.
Some politicians were also encouraged like House Representative Tom Emmer (R-MN), who called the findings of the directive “sound”.
The road ahead
While the promise of regulatory clarity is an important first step, Candace Kelly, general counsel for digital payment network Stellar, believes that input from industry participants will be crucial in the months ahead.
“If the desire to get this right is genuine – and we hope it is – it’s critical that industry is part of this process and engages in this process every step of the way,” Kelly told CoinDesk.
Kristin Smith believes the crypto lobby’s engagement with the federal government is set to get even more intense.
“There are going to be a lot of questions, a lot of policy solutions proposed, and it’s incumbent upon us in the industry to be a resource to policymakers and bring our own thoughtful solutions to the table,” she said.
The order calls for agency reports to be completed within six months, with lawmakers and the public having a chance to weigh in.