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The White House said on Sept. 16 that after President Joe Biden issued an executive order in March calling on a variety of agencies to look at ways to regulate digital assets, the agencies came up with nine reports, covering cryptocurrency impacts on financial markets, the environment, innovation, and other elements of the economic system.
Treasury Secretary Janet Yellen said one Treasury recommendation is that the U.S. “advance policy and technical work on a potential central bank digital currency, or CBDC, so that the United States is prepared if CBDC is determined to be in the national interest.”
“Right now, some aspects of our current payment system are too slow or too expensive,” Yellen said on a Sept. 15 call with reporters laying out some of the findings of the reports.
Central bank digital currencies differ from existing digital money available to the general public, such as the balance in a bank account, because they would be a direct liability of the Federal Reserve, not a commercial bank.
According to the Atlantic Council nonpartisan think tank, 105 countries representing more than 95 percent of global gross domestic product already are exploring or have created a central bank digital currency.
The council found that the United States and the UK are far behind in creating a digital dollar or its equivalent.
Treasury, the Justice Department, the Consumer Finance Protection Bureau, the Securities and Exchange Commission, and other agencies were tasked with contributing to reports that would address various concerns about the risks, development, and usage of digital assets. Several reports will come out in the next weeks and months.
Eswar Prasad, a trade professor at Cornell who studies the digitization of currencies, said Treasury’s report “takes a positive view about how a digital dollar might play a useful role in increasing payment options for individuals and businesses” while acknowledging the risks of its development.
He said the report sets the stage for the creation of agency regulations and legislation “that can improve the benefit-risk tradeoff associated with cryptocurrencies and related technologies.”
On Capitol Hill, lawmakers have submitted various pieces of legislation to regulate cryptocurrency and other digital assets.
Sheila Warren, CEO of the Crypto Council for Innovation, said in an emailed statement that the report “seem to kick the can down the road” she said, “we don’t see clear recommendations.”
The director of the National Economic Council, Brian Deese, told reporters that “we’ve seen in recent months substantial turmoil in cryptocurrency markets and these events really highlight how, without proper oversight, cryptocurrencies risk harming everyday Americans’ financial stability and our national security.”
“It is why this administration believes that now more than ever,” he said, “prudent regulation of cryptocurrencies is needed.”
He said on Sept. 16 that the Administration plans to “execute a comprehensive action plan with priority steps to mitigate key risks of cryptocurrencies—among others, money laundering and financing for terrorism.”
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