Presidential EO on Digital Assets

President Biden’s recent Executive Order on Ensuring Responsible Development of Digital Assets was a pleasant surprise. It is a moderate, forward-looking statement absent of the rhetoric against crypto and aware of the promise crypto offers:

“The United States has an interest in responsible financial innovation, expanding access to safe and affordable financial services, and reducing the cost of domestic and cross-border funds transfers and payments, including through the continued modernization of public payment systems.”

Also surprising was the extensive amount of space given to CBDCs (and almost none to stablecoins). “My administration places the highest urgency on research and development efforts into the potential design and deployment options of a United States CBDC.” It points out the benefits of CBDCs, especially financial inclusion, and the challenges, like privacy and interoperability.

The EO launches a multi-front effort to move forward with US CBDC development through research, which has long been seen in Europe and among international agencies but has been sorely lacking in the US. The Treasury will look at the implications of a CBDC on national interests (including the effect of foreign CBDCs), financial inclusion, interaction with other forms of crypto, and the threat to cash and bank money. Meanwhile, the Fed is to plan for a potential US CBDC launch, including any necessary legislative changes. And, the Office of Science and Technology Policy is to examine the design of a CBDC and the needed supporting technological infrastructure. Further, the US will work with the G20 to deal with interoperability.

In sum, it looks like the US is finally getting its act together on CBDCs.