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In his executive order last week, President Joe Biden called on a swathe of government agencies to work together to study the “responsible development” of digital assets.
But who is in charge of what, and when exactly will these efforts conclude?
Biden notes in the executive order that the assistants to the president for national security affairs and for economic policy “shall coordinate the executive branch actions necessary to implement this order.”
Jake Sullivan, a national security advisor for President Biden since January 2021, was previously the deputy assistant to former President Barack Obama, a national security advisor to Biden during his tenure as vice president, and deputy chief of staff to Hillary Clinton at the State Department.
Brian Deese serves as the director of the National Economic Council (NEC). Between 2009 and 2015, he was a special assistant for economic policy to Obama, deputy director of the NEC, and acting director of the Office of Management and Budget. He also served as a senior advisor to Obama from 2015 to 2017.
Before his latest appointment, Deese worked as the global head of sustainable investing for BlackRock, the world’s largest asset manager.
“We are clear-eyed that ‘financial innovation’ of the past has too often not benefited working families, while exacerbating inequality and increasing systemic financial risk,” Sullivan and Deese said in a statement published alongside the executive order.
“This history underscores the need to build robust consumer and economic protections into digital asset development.”
John Collins, partner at advisory firm FS Vectors and former policy head at Coinbase, called Sullivan and Deese “incredibly smart and well respected.”
“Their positions as leaders here is a really good indication of where [the government’s] head is at,” he told Blockworks.
Which agencies are involved?
The interagency process that Sullivan and Deese lead shall include the following entities, Biden notes in the order:
- the secretaries of state, treasury, defense, commerce, labor, energy and homeland security;
- the attorney general;
- 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; and
- the administrator of the United States Agency for International Development.
“Governments alone cannot solve these problems, and definitely not a government that operates in silos,” Sullivan and Deese said in the statement.
Officials from other agencies may be invited to attend interagency meetings, Biden adds in the order, including representatives from:
- the Board of Governors of the Federal Reserve System;
- the Consumer Financial Protection Bureau;
- the Federal Trade Commission (FTC);
- the Securities and Exchange Commission (SEC);
- the Commodity Futures Trading Commission (CFTC);
- the Federal Deposit Insurance Corporation (FDIC); and
- the Office of the Comptroller of the Currency (OCC).
A report by bitcoin company NYDIG argued that the executive order “notably excluded strong input from financial regulators such as the SEC, CFTC and OCC.”
When are the deadlines?
The executive order focuses on crypto regulation around consumer protection, financial stability, risk mitigation, the US’s financial leadership, financial inclusion and responsible innovation.
Biden has tasked Treasury Secretary Janet Yellen to submit a report on the implications of digital asset adoption and the changes in financial market and payment system infrastructures within six months.
She is to convene the Financial Stability Oversight Council (FSOC) within seven months to outline financial stability risks and regulatory gaps posed by digital assets and offer recommendations to address them.
Yellen is also expected to produce a report about the future of money and payment systems within six months. The report should include the potential implications of a US central bank digital currency (CBDC), the executive order states.
Federal Reserve Chair Jerome Powell is encouraged to research and report on the extent to which CBDCs could improve the efficiency and reduce the costs of existing and future payments systems. He has been asked to detail the steps for the potential launch of a CBDC.
In its January Central Bank Digital Currency report, the Federal Reserve declined to make policy recommendations.
Attorney General Merrick Garland is to assess whether legislative changes would be necessary to issue a US CBDC within six months. He will also issue a report in that timeframe on the role of law enforcement agencies in detecting, investigating and prosecuting criminal activity related to digital assets.
Other planned research includes distributed ledger technology’s impact on the environment, which Dr. Alondra Nelson, director of the Office of Science and Technology Policy, will submit within six months.
Commerce Secretary Gina Raimondo shall establish a framework for enhancing the country’s economic competitiveness in, and leveraging of, digital asset technologies.
The Senate Committee on Banking, Housing and Urban Affairs held a meeting Thursday addressing the role of digital assets in illicit finance.
Up to 90 days after illicit finance risks are submitted to the Congress of the National Strategy for Combating Terrorist and Other Illicit Financing, Yellen, Garland and Secretary of State Antony Blinken, among others, may offer additional views on the topic.
Yellen shall then develop a coordinated action plan based on the strategy’s conclusion within 120 days, the executive order notes.
Additionally, Biden has ordered Garland to analyze how to strengthen international law enforcement cooperation for detecting, investigating and prosecuting criminal activity related to digital assets.
Though industry watchers said the executive order was an important step in the policymaking process, they said legislation could take years.
“We may not like every single policy proposal that’s put forth six months from now,” Blockchain Association Executive Director Kristin Smith previously told Blockworks. “But at least we can think methodically about this and engage with the government.”