Summary: Executive Order on Ensuring Responsible Development of Digital Assets

March 10, 2022

President Biden’s Executive Order on Ensuring Responsible Development of Digital Assets was issued on March 9, 2022.

The Chamber is pleased to see that many of the tenets outlined in its 2019 National Action Plan for Blockchain are reflected in the Executive Order and we look forward to ongoing collaboration with regulators, policymakers and law enforcement as they progress through the process laid out in the announcement.

The Chamber believes the Executive Order represents a much-needed step toward putting in place coordinated and comprehensive policies that will support the growth of the U.S.-based blockchain and digital asset markets and put in place the necessary rules of the road to protect consumers, investors, and innovators alike.

We’ve summarized the key objectives, takeaways and timelines below.

KEY OBJECTIVES:

The EO prioritizes:

            • Responsible financial innovation
            • The growth of the crypto economy and the need for U.S. technological leadership and competitiveness 
            • Urgency on research and development of a Central Bank Digital Currency (CBDC)
            • Illicit finance and national security risks 
            • Interagency and international coordination
            • The requirement to build a regulatory framework to address regulatory gaps for potential systemic and consumer protection risks including data, privacy, custody and disclosures
            • Financial inclusion
            • Energy and climate change and they relate to digital assets

 

TIMELINES

KEY TAKEAWAYS

CBDC’s & Payment Systems

The Federal Reserve is encouraged to continue research and report on CBDC’s impact to the financial payments systems, evaluate the optimal form of a CBDC, and to develop a strategic plan on what is required to launch a CBDC.

The EO calls for the following reports:

  • Report on the future of money and payment systems from the Secretary of the Treasury, in consultation with the Secretary of State, the Attorney General, the Secretary of Commerce, the Secretary of Homeland Security, the Director of the Office of Management and Budget, the Director of National Intelligence, and the heads of other relevant agencies addressing:
    • What drives adoption of digital assets?
    • What technological innovation may influence this adoption?
    • What are the implications for the US financial system (including the modernization of and changes to the payment systems)?
    • What are the implications for CBDCs on economic growth/stability, financial inclusion,
    • national security/financial crime, impact on the financial system globally?
  • Attorney General report on legislative changes that would be required to issue CBDC, followed by a report including a legislative proposal to issue CBDCs.
  • The Office of Science and Technology Policy and the Chief Technology Officer report on what’s needed within the agencies to support the technological infrastructure, capacity and expertise. Report should include evaluation of future technologies (quantum computing) and how digital assets in federal processes can help government services.

Consumer, Investor and Business Protection

              • The SEC, CFTC, Federal Reserve, FDIC and OCC are encouraged to consider the extent to which investor and market protection measures may be used to address risks of digital assets.
              • The FTC and CFPB are encouraged to consider the extent to which privacy or consumer protection measures may be used to protect users of digital assets.

The EO calls for the following report:

      • Report on Digital assets in financial markets and payment systems from the Secretary of the Treasury, in consultation with the Secretary of Labor and the heads of other relevant agencies, including, as appropriate, the heads of independent regulatory agencies such as the FTC, the SEC, the CFTC, Federal banking agencies, and the CFPB, focusing on:
        • Reasons for mass adoption of digital assets
        • Risks and opportunities that the growth in digital assets presents
        • Legislative and regulatory proposals to protect consumers, investors, and businesses and support expanding access to safe and affordable financial services

Illicit Financing

    • Requires Secretary of the Treasury, in consultation with Secretary of State, Attorney General, Secretary of Commerce, Secretary of Homeland Security, Director of the Office of Management and Budget, Director of National Intelligence and heads of other relevant agencies to develop a coordinated action plan for mitigating digital asset-related illicit financing and national security risks.
    • Secretary of the Treasury, Secretary of State, Attorney General, Secretary of Commerce, Secretary of Homeland Security, Director of the Office of Management and Budget, Director of National Intelligence, and heads of other relevant agencies may submit a report “offering additional views” on illicit finance risks posed by digital assets (cryptocurrencies, stablecoins and CBDC) and trends in the use of digital assets by illicit actors.
    • The EO calls for a push for adoption of international FATF standards (Travel Rule) to close gaps in the global financial system.

Competition and Competitiveness

      • The AG, FTC and CFPB are encouraged to consider the effects of digital assets on competition policy.
      • The Departments of Commerce, State and Treasury are required to develop a framework for enhancing US economic competitiveness in and leveraging of digital asset technologies.

International Cooperation

The EO calls for:

      • The Secretary of the Treasury, in consultation with the Secretary of State, the Secretary of Commerce, the Administrator of the United States Agency for International Development, and the heads of other relevant agencies to develop a framework for interagency international engagement with foreign counterparts and in international fora to adapt, update, and enhance adoption of global principles and standards on digital assets and to promote development of digital asset and CBDC technologies.
      • A report after the framework is established on the priority actions taken under the framework.

Law Enforcement

The EO calls for the following reports:

        • AG Report on the role of law enforcement in detecting, investigating and prosecuting criminal activity related to digital assets. Report to include details regarding the regulatory and legislative actions required.
        • AG report on recommendations of how to strengthen international law enforcement cooperation for detecting, investigating and prosecuting criminal activity related to digital assets.

Energy & Climate Change

The EO calls for the following reports:

 

        • The Director of the Office of Science and Technology Policy, in consultation with the Secretary of the Treasury, the Secretary of Energy, the Administrator of the Environmental Protection Agency, the Chair of the Council of Economic Advisers, the Assistant to the President and National Climate Advisor, and the heads of other relevant agencies to submit a report on the role of distributed ledger technology (DLT) and economic/energy transitions, focusing on:
          • the potential for technologies to impede or advance climate change
          • the impacts of technology on environment
          • the effect of cryptocurrencies’ consensus mechanisms on energy usage;
          • the potential uses of blockchain to monitor or mitigate climate impacts;
          • the implications on energy policy
          • Additional report to follow one year after initial report with an update.

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