US President Joe Biden has signed an executive order calling on the government to examine the risks and benefits of cryptocurrencies, placing great urgency on the research and development of a possible digital American dollar.
“Digital assets, including cryptocurrencies, have seen explosive growth in recent years, surpassing a $3 trillion market cap last November,” the White House said in a fact sheet, adding around 16 per cent of adult Americans, approximately 40 million people, have invested in, traded, or used cryptocurrencies.
“The rise in digital assets creates an opportunity to reinforce American leadership in the global financial system and at the technological frontier, but also has substantial implications for consumer protection, financial stability, national security, and climate risk,” it added.
The executive order signed on Wednesday lays out a national policy for digital assets across six key priorities: consumer and investor protection; financial stability; illicit finance; US leadership in the global financial system and economic competitiveness; financial inclusion; and responsible innovation, Xinhua news agency quoted the White House as further saying.
Meanwhile, the order directs the American government to assess the technological infrastructure and capacity needs for a potential Central Bank Digital Currency (CBDC), and encourages the Federal Reserve to continue its research, development, and assessment efforts for a CBDC.
“We’re placing the highest urgency on the effort to assess the potential benefits and the risks of a digital dollar on payment systems, on financial stability, on national security,” a senior administration official told reporters.
“We are constantly assessing and monitoring any developments that relate to a core policy objective of ours, which is to maintain the centrality of the dollar in global financial markets and in the global economy.”
More than 100 countries are currently exploring or piloting central bank digital currencies for both cross-border and domestic use, and many of these countries are also working together to set standards for CBDC design and cross-border systems, according to the White House.