President Joe Biden released an executive order Wednesday that could curtail opportunities that cryptocurrency provides for economic advancement, notwithstanding the order’s hopeful tone about crypto’s potential to promote efficiency and financial inclusion. Ironically, the order may also introduce new financial risks in the name of preventing them.
The White House fact sheet on the order notes correctly that the rise of cryptocurrency “creates an opportunity to reinforce American leadership in the global financial system and at the technological frontier.”
That cryptocurrency advances American values such as liberty and democracy has been shown by Ukrainian leaders‘ and citizens’ creative use of cryptocurrency byproducts like stablecoins and NFTs (non-fungible tokens) to raise funds to fight Russian forces and advance a message of freedom.
That’s why it’s essential that regulatory agencies don’t use a sledgehammer approach that would stamp out legitimate uses of cryptocurrency in the name of catching bad actors. Biden’s executive order emphasizes coordination of various agencies involved in cryptocurrency regulation but is silent on the need for those agencies to adhere to the rule of law and refrain from exceeding powers given to them by Congress.
This omission in the order is unfortunate because the Securities and Exchange Commission in both the Trump and Biden eras has stretched its authority over “securities” to go after cryptocurrencies that clearly don’t fit the legal definition. As a result, U.S. citizens lack access to legitimate cryptocurrencies such as Ripple’s XRP – the object of punitive actions by the SEC now being challenged in court – that are widely available in other countries and have many practical uses.
Most concerning about the executive order is its seeming embrace of central bank digital currencies that would be issued by the Federal Reserve. The order calls for the “highest urgency on research and development efforts into the potential design and deployment options of a United States CBDC.” Yet it pays scant attention to numerous downsides of government-run cryptocurrency, such as massive risks to privacy and financial stability.
Read the full article at USA Today.