Joe Biden, President of the United States. © Getty — Drew Angerer
The Biden administration continues its work in the field of crypto. It has just sketched out the outlines of future American regulations for the sector, unveiling on September 16 guidelines aimed at supporting the development of cryptocurrencies, which have been facing a period of severe turbulence since May.
These new directions from the US executive come six months after Joe Biden signed an executive order in early March directing federal agencies to take an interest in the development of a central bank digital currency in the United States and to provide recommendations for establishing a regulatory framework, with six priorities: protecting consumers and investors, promoting financial stability, combating illicit financing, US leadership in the global financial system and economic competitiveness, financial inclusion, and responsible innovation.
The American president subsequently received nine reports on which he relied in order to establish “the first whole-of-government approach to addressing the risks and harnessing the potential benefits of digital assets and their underlying technology”. According to the White House, these reports “articulate a clear framework for the responsible development of digital assets and pave the way for further action at home and abroad”.
Amendment of federal laws in sight
To better regulate the crypto industry, the Biden administration wants to grant strong power to regulators, such as the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), who will be able to carry out investigations against illegal practices involving digital assets and define rules to counter risks to the ecosystem. In the fight against the illicit use of cryptocurrencies, the White House does not rule out appealing to Capitol Hill to strengthen existing legislation.
“The President will consider whether to ask Congress to amend the Bank Secrecy Act (BSA), anti-whistleblower laws, and laws against unlicensed money transmission to explicitly apply to service providers. ‘digital assets, including digital asset exchanges and NFT platforms’, indicates the American executive. Joe Biden also reserves the right to urge Congress to beef up penalties for transmitting money without a license and to change certain federal laws “to allow the Department of Justice to prosecute crimes related to digital assets in any jurisdiction where a victim of such crimes is discovered”.
However, it is not only a question of hunting down malicious actors. To encourage innovation in the sector, the administration of the Democratic president advocates several measures, such as the adoption of instant payment systems and improving the efficiency of cross-border payments. The Office of Science and Technology Policy (OSTP) and the National Science Foundation (NSF) are also being asked to launch a digital asset research and development program to look at topics like next-generation cryptography, the programmability of transactions, cybersecurity, privacy protection, or even the environmental impacts of digital assets.
The digital dollar still on the table
Finally, the White House wants to continue the digital dollar project, officially launched by Joe Biden at the start of the year. In the eyes of the US executive, a central bank digital currency “has the potential to deliver significant benefits”in particular by serving as a base for “a more efficient payment system” and to “new technological innovations”. It could also “facilitate faster cross-border transactions” and “promote financial inclusion and equity by enabling access for a wide range of consumers”.
“A potential U.S. central bank digital currency could also help preserve U.S. global financial leadership and support the effectiveness of sanctions. But it could also have unintended consequences, including races for such currencies in times of stress”, concludes the Biden administration. With these guidelines set, Democrats will now have to work hard to build crypto legislation that can win over the Republican camp.