WASHINGTON—The price of bitcoin rose after President Biden announced an executive order to study digital currencies, a move the industry hailed and skeptics decried as delaying needed regulation.
The order, titled “Ensuring Responsible Development of Digital Assets,” directed federal government agencies to report on digital currencies and consider new regulations. He described the risks that cryptocurrencies pose to the economy, national security and the climate, while noting their possible benefits.
He also asked the agencies to examine the possibility of issuing a digital version of the dollar, instructing the Ministry of Justice to assess whether it would require new legislation and possibly to prepare such legislation. Some central banks around the world have experimented with the concept to keep pace with private sector payments innovations, and the Federal Reserve has already begun to assess the possibility.
As the details of the executive order were leaked overnight, the price of bitcoin, the largest cryptocurrency, rose nearly 9%. Bitcoin’s price was $41,910 on Wednesday night, according to CoinDesk.
While financial regulators have long taken a cautious stance toward cryptocurrency, the executive order marked the first time the White House has officially stepped in.
Crypto advocates hailed the lack of any impending federal action in the order and its recognition of the industry’s positives, such as fostering innovation and financial inclusion.
“We commend the White House for recognizing this as a defining moment for American innovation on the global stage,” said Faryar Shirzad, chief policy officer at the largest US crypto exchange, Coinbase Global. Inc.,
in a series of tweets.
“We look forward to continuing our work with regulators and legislators,” he said.
Valkyrie Funds chief executive Leah Wald said she expects the order to lead to regulations that will further help the industry grow. “Clarity drives adoption, and adoption leads to growth,” she said. His company sells crypto-focused exchange-traded funds.
The crypto industry has waged an intense lobbying campaign over the past year to avoid more aggressive regulation of digital assets. A report released this week by Public Citizen, a progressive advocacy group, said the number of cryptocurrency lobbyists has nearly tripled in recent years, from 115 in 2018 to 320 in 2021. went from $2.2 million to $9 million.
Crypto-skeptics see the executive order as a step backwards.
Lee Reiners, executive director of the Global Financial Markets Center at Duke University School of Law, said he seems likely to delay any substantive policy decisions until after the midterm elections in November. In most cases, the White House gives agencies at least 180 days to produce their reports.
“Before this executive order, the narrative that had been circulating was that the administration was about to crack down on crypto,” Reiners said.
“This executive order is 180% of that,” he said. “It’s as close to a crypto hug as you could have hoped for from this Biden administration, if you’re pro-crypto.”
Financial regulators have already been studying cryptocurrencies for years. The Treasury Department’s Financial Crimes Enforcement Network released guidance on cryptocurrency payment systems in 2014. The Securities and Exchange Commission has taken dozens of enforcement actions against individuals and entities in the industry, while the Commodity Futures Trading Commission set up an initiative to study cryptocurrency and other technological innovations in 2017 .
A senior administration official noted that the White House held a number of “Crypto Sunday” events to gather feedback from stakeholders during the preparation of the executive order. A White House spokeswoman did not immediately respond to questions about the events, such as how many took place or who participated.
SEC Chairman Gary Gensler said many cryptocurrencies should be regulated as securities such as stocks and bonds, which would entail strict disclosure requirements from issuers. Crypto firms lobbied for CFTC oversight, believing it would be easier to comply.
Matt Kluchenek, a partner at law firm Mayer Brown LLP, said Mr Biden’s executive order appears unlikely to resolve those issues.
“Rather than providing direction as to who regulates what, the order calls for research, assessment and coordination within specified timeframes,” Kluchenek said. “Many market players were hoping for a more concrete direction.”
Industry lobbyists say tough regulation would risk pushing the cryptocurrency market further overseas. Some law enforcement and national security officials are hesitant to discourage the use of cryptocurrencies such as bitcoin, saying they allow transactions to be traced more easily than cash.
“Ensuring that the United States remains the leader in global financial infrastructure for generations to come has never been more paramount to economic and national security interests,” said Sigal Mandelker, a former Treasury official. of the Trump administration who is now a general partner of Ribbit Capital.,
a venture capital firm invested in crypto. “The president’s acknowledgment of this is an essential step in that direction.”
But investor advocates fear the executive order provides an opportunity to water down existing regulations.
“Silicon Valley and its army of new lobbyists may have feared the worst, and instead the White House is rolling out the welcome mat,” said Tyler Gellasch, executive director of the Healthy Markets Association, a group of investors. “Politicians and lobbyists will likely use this as a frontline to try to rewrite securities, commodities and banking laws under the guise of better regulating crypto.”
—Ian Talley and Paul Vigna contributed to this article.
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