Executive Actions On Cryptocurrencies
The purpose of this blog post is to summarize the Executive Actions taken by the President of the United States as they relate to cryptocurrencies.
NOTE: Regulatory guidance in this area is rapidly evolving. As such, this blog post may not be entirely up to date. Please DYOR.
INTRODUCTION
An executive order or action is an official directive from a U.S. President to federal agencies that often have the same power of a law. The legal basis for such actions is rooted in Article II of the U.S. Constitution, which gives broad executive and enforcement authority to presidents. The ability to make such orders is also based on express or implied acts of Congress that delegate to the president discretionary power (i.e, delegated legislation).
As it relates to cryptocurrencies, in 1988 President Reagan created the President’s Working Group on Financial Markets (PWG), which occasionally reviews the state of the financial industry. As noted in my earlier blog posts, in 2021, the PWG, alongside the OCC and the FDIC, issued a report on stablecoins.
The focus of this blog post is on Executive Order 14067, issued on March 9, 2022 by President Biden, titled “Ensuring Responsible Development of Digital Assets” and the ensuing Fact Sheet issued by the White House on September 16, 2022 regarding the government’s approach to cryptocurrencies.
EXECUTIVE ORDER 14067
Executive Order (EO) 14067 represents an all-hands-on-deck government approach to cryptocurrency and blockchain technology and outlines the policy priorities for relevant federal agencies and the coordination necessary to achieve those priorities. As noted above, on September 16, 2022, the White House released a fact sheet that was based on the reports it received in response to EO 14067.
Specifically, the EO requires the Executive Branch and federal agencies to coordinate in creating a unified digital asset/blockchain framework to advance six policy objectives:
Protecting consumers, investors, and businesses;
Protecting United States and global financial stability and mitigating systemic risk;
Mitigating illicit finance and national security risks posed by misuse of digital assets;
Reinforcing U.S. leadership in the global financial system and in technological and economic competitiveness, including through the responsible development of payment innovations and digital assets;
Promoting access to safe and affordable financial services; and
Supporting technological advances that promote responsible development and use of digital assets.
The EO outlines that this should be achieved through meetings between and among agency heads and the executive branch and spells out that each agency should submit a research report on their findings in six months.
The agencies specifically mentioned are: the Secretary of State, the Secretary of the Treasury, the Secretary of Defense, the Attorney General, the Secretary of Commerce, the Secretary of Labor, the Secretary of Energy, the Secretary of Homeland Security, the Administrator of the Environmental Protection Agency, the Director of the Office of Management and Budget, the Director of National Intelligence, the Director of the Domestic Policy Council, the Chair of the Council of Economic Advisers, the Director of the Office of Science and Technology Policy, the Administrator of the Office of Information and Regulatory Affairs, the Director of the National Science Foundation, the Administrator of the United States Agency for International Development, Board of Governors of the Federal Reserve System, the Consumer Financial Protection Bureau (CFPB), the Federal Trade Commission (FTC), the Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC), the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, and “other Federal regulatory agencies.”
The EO also outlines recommended actions to take on developing and implementing a U.S. Central Bank Digital Currency (CBDC).
Specifically, the EO states that the Biden administration “places the highest urgency on research and development efforts into the potential design and deployment options of a United States CBDC” and that a CBDC must “be consistent with . . . democratic values, including privacy protections” and ensure that “global financial system has appropriate transparency, connectivity, and platform and architecture interoperability or transferability.”
To achieve the administration’s CBDC goals, the EO tasks the Treasury and other agencies with submitting a report (within 180 days) on:
the potential implications of a United States CBDC, based on the possible design choices, for national interests, including implications for economic growth and stability;
the potential implications a United States CBDC might have on financial inclusion;
the potential relationship between a CBDC and private sector-administered digital assets;
the future of sovereign and privately produced money globally and implications for our financial system and democracy;
the extent to which foreign CBDCs could displace existing currencies and alter the payment system in ways that could undermine United States financial centrality;
the potential implications for national security and financial crime, including an analysis of illicit financing risks, sanctions risks, other law enforcement and national security interests, and implications for human rights; and
an assessment of the effects that the growth of foreign CBDCs may have on United States interests generally.
The EO then tasks the Treasury and the Fed with submitting (within 210 days) a legislative proposal based on the above reports.
Lastly, the EO calls for a number of reports (within 180 days) from federal agencies regarding the following:
Measures to Protect Consumers, Investors, and Businesses.
Actions to Promote Financial Stability, Mitigate Systemic Risk, and Strengthen Market Integrity.
Actions to Limit Illicit Finance and Associated National Security Risks.
Actions Related to Fostering International Cooperation and U.S. Competitiveness.
UPDATE: As of September 16, 2022, all of the above reports have been submitted and make up the framework of the White House fact sheet noted above.
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