Joe Biden’s White House is expected to issue an executive order in the coming weeks about actions the United States government will take regarding digital assets.
A source “familiar with the White House’s plan” told Barron’s that the executive order would be issued in a national security memorandum. Biden’s memorandum would assign some government entities to study crypto, stablecoins and nonfungible tokens with the goal of developing a workable regulatory framework.
The source was quoted as saying:
“This is designed to look holistically at digital assets and develop a set of policies that give coherency to what the government is trying to do in this space.”
Rumors of a potential executive order on crypto have been swirling in recent days. Earlier this week, Forbes reported those government entities would likely issue reports on their findings by mid-2022 after having looked at “the systemic risks of cryptocurrencies and their illicit uses.”
The rationale for the executive order falling under national security is that crypto is a cross-border tool for shifting money. The ability of decentralized blockchain technology to circumvent geo-specific surveillance or rules means the administration may push for synchronized international regulations with other countries.
Eric Balchunas, senior exchange-traded fund (ETF) analyst at Bloomberg, noted earlier on Friday that the Biden administration viewing crypto as a national security threat may also be behind the constant rejections of Bitcoin (BTC) spot ETFs.
He also referred to the new developments as a “broader crypto crackdown” in a Friday tweet.
Another piece of legislation worrying the crypto industry was proposed by House Democrats on Tuesday, the America COMPETES Act. Jerry Brito, executive director for Washington D.C.-based think tank Coin Center, noted that one provision in the proposed bill would allow the Treasury Secretary to ban crypto exchanges from operating without any prior notice.
2/ The so-called "special measures" provision (proposed by @jahimes) would essentially give the Treasury Secretary unchecked and unilateral power to ban exchanges and other financial institutions from engaging in cryptocurrency transactions. How would it do this? pic.twitter.com/f3tVow9nxA— Jerry Brito (@jerrybrito) January 26, 2022
Brito said that he believes the bill is likely to pass “in some form.”
Meanwhile, supporters among lawmakers are trying to smooth off the rougher edges of already-passed legislation. Echoing pleas from crypto industry experts, a bipartisan group of House representatives has asked Biden-nominated Treasury Secretary Janet Yellen to clarify aspects of the Infrastructure Bill that pertain to digital assets. The Infrastructure Bill was signed into law last November amid some controversy, as its definition of a “broker” is arguably too broad by including miners, software developers, transaction validators and node operators.
The group of bipartisan lawmakers proposed on Wednesday to narrow the scope of what information a broker can obtain to prevent creating an “un-level playing field for transactions in digital assets and those required to provide them.” Some brokers, as they are currently defined in the bill, do not have the ability to verify information about senders and receivers of crypto as required by law. Yellen has yet to respond to this request.