U.S. President Joe Biden signed an executive order on Wednesday requiring the government to assess the risks and benefits of creating a central bank digital dollar, as well as other cryptocurrency issues, the White House said.
Bitcoin surged on the news as the administration`s holistic and deliberative approach calmed market fears about an immediate regulatory crackdown on cryptocurrencies. In midday trading, bitcoin rose 9.1% to $42,280, on track for its largest percentage gain since Feb. 28.
Biden`s order will require the Treasury Department, the Commerce Department and other key agencies to prepare reports on “the future of money” and the role cryptocurrencies will play.
Wide-ranging oversight of the cryptocurrency market, which surged past $3 trillion in November, is essential to ensure U.S. national security, financial stability and U.S. competitiveness, and stave off the growing threat of cyber crime, administration officials said.
Analysts view the long-awaited executive order as a stark acknowledgement of the growing importance of cryptocurrencies and their potential consequences for the U.S. and global financial systems.
“The growth in cryptocurrencies has been explosive,” Daleep Singh, deputy national security adviser for economics, said in an interview with CNN.
Cryptocurrencies and digital assets can affect how people access banking, whether consumers are safe and protected from volatility, and the primacy of the U.S. dollar in the global economy, he said.
The executive order is part of an effort to promote responsible innovation but mitigates the risk to consumers, investors and businesses, Brian Deese, director of the National Economic Council, and Jake Sullivan, White House national security adviser, said in a statement.
“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,” they said.
One key objective is to redress inefficiencies in the current U.S. payments system and boost financial inclusion, especially of poor Americans, about 5% of whom do not currently have bank accounts due to high fees, one official said.