Biden's Executive Order on Digital Assets Splits Crypto Industry and Bitcoin Idealists

For years, the crypto industry—tired of what it sees as regulation by enforcement action—has been pleading for the U.S. federal government to coordinate its efforts on crypto policy.

President Biden today made a step toward doing that, signing the Executive Order on Ensuring Responsible Development of Digital Assets. The stated purposes of the order are to find ways to mitigate risks to both individual consumers and the global financial system, while also preventing crypto's "misuse" for criminal activities, all while cementing the United States' role as a leader in technological innovation so Americans who are "underserved by the traditional banking system" can gain more financial access.

The bill gives an alphabet soup of agencies three to seven months to report back to the president on a variety of issues. Intelligence, State Department and Treasury officials have 90 days, for instance, to return a strategy for limiting cryptocurrency's use in illicit and terrorist financing. The SEC, FTC, and CFTC and other government banking bodies will have 180 days to produce a report recommending consumer protection issues.

In short, it's setting the table for the type of comprehensive regulations industry actors have both been asking for and—if it doesn't go their way—fearing.

Jeremy Allaire, the CEO of USDC stablecoin issuer Circle, says the White House's decisions to use a "whole-of-government approach to at once harness opportunities while controlling and mitigating inherent risks in responsible innovation is encouraging." He says Circle, which pushed such an approach, remains hopeful that policymakers will come out of the review process with a solid understanding of the opportunities crypto presents.

Denelle Dixon, CEO of the Stellar Development Foundation (SDF), writes that the order "recognizes the need for clarity so the industry can continue to evolve, grow, and meet the ever-increasing enthusiasm and momentum we see for the sector." And SDF General Counsel Candace Kelly told Decrypt that she can see the foundation's interactions with policymakers pay off in the order: "In those engagements, we've been clear and consistent that before we open the door to brand new agencies and frameworks, we first need to evaluate what exists and how it applies to the industry. The EO as a whole, and its specific reference to our refrain of 'same business, same risk, same rules,' feels like a recognition of that reality."

Blockchain Association Head of Governmental Relations Dave Grimaldi is also optimistic: "We were fearing a heavier hand, and possibly some tougher proclamations, but for an emerging industry, this is a sensible step toward protection, law enforcement, and education."

Coin Center Executive Director Jerry Brito says the order stands in "striking contrast" to recent hot takes made by politicians and media members over the dangers of cryptocurrency, whether that be ruining the climate or theoretically helping Russia evade sanctions: "The [executive order] is just further affirmation that when serious officials take a sober look at crypto, the reaction is not to light their hair on fire, but instead to recognize it as a innovation that the U.S. will want to foster and lead while mitigating obvious risks."

Not everyone is so effusive.

Erik Voorhees, a staunch libertarian and founder of crypto platform ShapeShift more or less dismissed Biden's action as more of the same: "The crypto Executive Order basically says 'we're going to look into this stuff' (as if they haven't been for years) and then lists a number of platitudes about balancing innovation with protecting the financial system."

Human Rights Foundation CSO Alex Gladstein points out that the order is "heavy on CBDCs" and "doesn't mention Bitcoin." Gladstein sees BTC as a fundamental tool in spreading human rights, while he views central bank digital currencies (CBDCs) such as the one being piloted in China as potential vectors for financial surveillance.

Senator Cynthia Lummis (R-WY), a strong Bitcoin advocate, adds that she is "unconvinced on the need for a central bank digital currency" but "will continue to follow the Federal Reserve's work in this area closely."

Still others hope that the executive order might lead to some unintended consequences. Messari founder Ryan Selkis, pointing to what he sees as inequalities in regulated crypto markets, says the order might give President Biden an opportunity to "look at the failures of [SEC Chair Gary Gensler] in protecting investors, promoting fair crypto markets in the US, and promoting capital formation"—the very objectives the executive order lays out.

Editor's Note: This article has been updated with a comment from Candace Kelly of Stellar Development Foundation.