The Biden administration has named the crypto industry a matter of national security, reported Barron’s late last week citing a source familiar with the matter.
According to the source, Biden’s White House is now preparing an executive order directing US federal agencies to regulate the crypto space, including NFTs and stablecoins, which could be released this month.
The apparent idea is to enact a co-ordinated plan to regulate digital assets.
US agencies currently lack consensus on an appropriate regulatory framework, with the Securities and Exchange Commission, Commodities Futures and Trading Commission, and various Treasury bureaus dueling for oversight.
The State and Treasury Departments, National Economic, White House National Security, and Economic Adviser Councils have also been studying the crypto ecosystem.
Biden’s cabinet will reportedly direct these agencies to propose regulatory frameworks within six months, with Congress invited to weigh in.
But some members of Biden’s own party have criticized his plan.
Congressional candidate Aarika Rhodes said Biden’s proposed executive order shows “exactly why we need new voices in Congress and advocates on the Financial Services Committee.”
Crypto is a national security matter elsewhere
In some countries where inflation is exceptionally high like Turkey, Nigeria, Argentina, and certainly Venezuela, capital has fleed into Bitcoin and stablecoins.
So, capital flight is already a matter of national security for many nations. Unsurprisingly, leaders in the above four countries have repeatedly attempted to ban fiat-to-crypto services.
Other countries such as Russia are also working on regulatory frameworks for crypto. Russia’s central bank urged a ban of crypto activities like mining and trading, but Vladimir Putin personally overruled that ban on mining.
In more stable economies like the US, where core inflation is around 7%, crypto is used for more speculative purposes rather than to preserve purchasing power.
Biden has expressed interest in working with other countries to create a unified regulatory framework.
His administration is particularly concerned about the potential of some digital currencies to challenge the US dollar’s reserve currency status.
China, the world’s second-largest economy, intends to launch its central bank digital currency (CBDC) during February’s Winter Olympics in Beijing.
As for a US-issued CBDC, the Federal Reserve has published detailed studies and continues active research in the matter. In the meantime, the Treasury has urged Congress to regulate privately-issued stablecoins like Tether and Circle.
But when Biden signs this supposedly upcoming executive order, the president will formally elevate the crypto industry to a matter of national security for the first time in US history.
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