Biden to reportedly issue executive order related to cryptocurrency

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One expert says the order could mean the end of the cryptocurrency gold rush

The eyes of cryptocurrency aficionados across the U.S. will be on President Biden this week. According to sources, he is set to sign an executive order that will lay out the framework for the country’s cryptocurrency strategy.

Bloomberg News reports that the White House will direct federal agencies to explore the national security and economic impact of digital assets, and it's possible that those efforts may lead to regulatory changes.

The timing of Biden’s move is interesting given the sanctions the U.S. and its allies have imposed on Russia, not to mention the tourniquet Coinbase applied by blocking 25,000 Russia-linked crypto addresses. However, reports indicate that the executive order has been in the making since last year. 

The order is predicted to require federal agencies such as the Commerce Department and the State Department to pull together their list of what they're doing with cryptocurrencies by the end of the year. 

Will the U.S. have its own cryptocurrency?

One of the possibilities being floated as part of Biden’s order is a U.S.-issued central bank digital currency (CBDC). In a white paper released by the Federal Reserve in January, Federal Reserve officials said a CBDC could potentially offer a range of benefits. 

“For example, it could provide households and businesses a convenient, electronic form of central bank money, with the safety and liquidity that would entail; give entrepreneurs a platform on which to create new financial products and services; support faster and cheaper payments (including cross-border payments); and expand consumer access to the financial system,” the officials said.

However, they also noted that a CBDC might also present certain risks and would raise important policy questions. Some concerns include how it might affect the financial sector's market structure, the cost and availability of credit, the safety and stability of the financial system, and the efficacy of monetary policy. 

ConsumerAffairs asked Dr. Robert R. Johnson, Professor of Finance at the Heider College of Business at Creighton University and CEO and Chair of Economic Index Associates, to weigh in on the possibility of a CBDC.

“Biden's proposed Executive Order addressing cryptocurrency regulation is long overdue. Many consumers are speculating in cryptocurrencies without understanding what they are and the risks inherent in speculating in them,” Johnson told ConsumerAffairs. He also drove home how volatile cryptocurrencies can be, saying that there is no method to value the various cryptocurrencies utilizing fundamental analysis.

“The cryptocurrency industry has done a fabulous job of marketing these risk assets … encouraging the commitment of funds to crypto. Naive investors might infer that these assets are regulated in the same manner that stocks and bonds are regulated,” Johnson stated.

Johnson also said that if CBDCs come to pass, it might mean bad news for the current crop of cryptocurrency apostles.

“Do market participants really believe that the Fed is going to cede control of the money supply to Bitcoin and other non-governmental virtual currencies? I believe we are seeing the beginning of the end of the crypto gold rush,” he said. 

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