President Joe Biden has ordered the U.S. government to take a hard look at how to regulate the cryptocurrency market.
In an executive order Wednesday, Biden directed federal agencies to explore various regulatory measures for digital assets, including cryptocurrencies, with the goals of protecting consumers and investors, ensuring the stability of the financial system, and curbing illicit activity, among other things.
When the first cryptocurrency, Bitcoin, was created in 2009, it was supposed to be a way for people to transfer money outside the established financial system. Since then crypto has exploded in popularity, often as more of a speculative investment than as a practical or widely-used way to make purchases, as originally intended.
The crypto market has now become so large—$3 trillion as of November, up from $14 billion in 2016—that the risks it poses to the financial system need to be reduced, Biden said in the executive order.
The order outlined a number of measures to be undertaken by the government, including:
- The Treasury Department and other agencies should assess how to protect consumers, investors, and the financial system from digital-asset risks and recommend new policies for the growing sector.
- Agencies should mitigate the illicit finance and national security risks posed by cryptocurrency. Lawmakers and officials recently worried it could be used by Russia to avoid sanctions, for example.
- The Federal Reserve should continue exploring how to develop a central bank digital currency, a kind of digital dollar that, unlike current cryptocurrencies, could be practical and become widely used for everyday transactions.
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