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Joe Biden orders study of cryptocurrency risks and a digital dollar

<i>Anthony Kwan/Getty Images</i><br/>Pedestrians walk past a display of cryptocurrency Bitcoin on February 15
Getty Images
Anthony Kwan/Getty Images
Pedestrians walk past a display of cryptocurrency Bitcoin on February 15

By Betsy Klein, CNN Business

President Joe Biden will sign an executive order Wednesday establishing the first-ever federal strategy on cryptocurrencies, the White House said.

Biden will order the exploration of a digital currency operated by the US central bank, and he encouraged regulators to identify and mitigate risks digital assets pose to the financial system and broader economy.

“The E.O. will help position the U.S. to keep playing a leading role in the innovation and governance of the digital assets ecosystem at home and abroad, in a way that protects consumers, is consistent with our democratic values and advances U.S. global competitiveness,” National Economic Council director Brian Deese and national security adviser Jake Sullivan said in a statement.

It aims, Deese and Sullivan said, to “(encourage) innovation but (mitigate) the risks to consumers, investors, and businesses, broader financial stability, and the environment.”

Sixteen percent of Americans have invested in, traded, or used cryptocurrencies, the White House said in a fact sheet.

Biden’s executive order is centered around six priorities: “consumer and investor protection; financial stability; illicit finance; U.S. leadership in the global financial system and economic competitiveness; financial inclusion; and responsible innovation.”

It directs the Department of Treasury to assess and develop policy recommendations and encourages regulators to ensure oversight, it encourages the Financial Stability Oversight Council to identify risks and develop policy recommendations on regulatory gaps, and it calls for a focus on coordinated action across federal agencies to mitigate illicit finance and national security risks.

Treasury Secretary Janet Yellen said the executive order will help the government make markets fairer and more transparent.

“This approach will support responsible innovation that could result in substantial benefits for the nation, consumers, and businesses,” Yellen said in a statement. “It will also address risks related to illicit finance, protecting consumers and investors, and preventing threats to the financial system and broader economy.”

The order will also direct the Department of Commerce to establish a framework to drive US competitiveness and leadership on cryptocurrencies, support the responsible development, design, and implementation of crypto systems, among other provisions.

Notably, the executive order also calls on the federal government to “explore a US Central Bank Digital Currency by placing urgency on research and development of a potential United States CBDC, should issuance be deemed in the national interest.”

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