Lynn Johannson, Advisor, Sustainability and ESG
January 4th, 2024
Lynn Johannson, President of E2 Management Corporation and Catalyst for THE Collaboration
In a care[...]
Responsible Development of Digital Assets (Crypto): Decoding Biden’s Executive Order
CATO Institute | Nicholas Anthony | Mar 9, 2022
President Biden’s executive order on cryptocurrency is finally here. Despite the anxiety that has been brewing since talks about the order first emerged in January, it is ultimately seeking answers, not action. And luckily for the President, the Cato Institute has many of the answers he seeks.
Let’s consider a few of the questions from the order.
1. What type of regulations are needed to establish consumer protection and financial stability?
There’s been no shortage of discussions in the space regarding how cryptocurrency regulation might take shape. In fact, Jennifer Schulp even hosted a four‐part event series dedicated to digging deeper into the discussion (Parts 1, 2, 3, and 4).
See: Updated Report: Regulation of Cryptocurrency Around the World (Nov 2021)
As the Biden administration digs into this question, however, it is critically important that the discussion is built on a sound foundation. Senator Tommy Tuberville (R‑AL) made this point well at a senate hearing last week when he asked witnesses what market failures need to be addressed in the cryptocurrency market. Before any new regulatory regime is launched, it’s critical that this question be addressed.
For specific examples of how to best regulate, see:
- A Simple Proposal for Regulating Stablecoins
- A “Narrow” Path to Efficient Digital Currency
- The Trap of the Trilemma of Cryptocurrency Regulation
2. Should the Federal Reserve issue a central bank digital currency, or CBDC? And what are the merits of a CBDC?
Another big debate in the realm of digital currencies has been whether the Federal Reserve (Fed) should issue a central bank digital currency (CBDC). The answer, quite simply, is no. As the recent events in Canada made clear, a CBDC would risk creating a direct line that might be weaponized by the government to control the public.
See: E-CNY to be accepted at this month’s games, as over 80 countries work towards a CBDC
As for what merits a CBDC might offer, one need only look at the Fed’s own discussion paper. After years of flirting with the idea of a CBDC and a year spent on writing the discussion paper, the Fed was only able to come up with four potential benefits of a CBDC. Considering each of these potential benefits are already being delivered through other endeavors, the Fed has not made a case for issuing a CBDC. As Cato scholars have argued, the United States would be better off renouncing plans to launch a CBDC.
For more on why the Fed should not issue a CBDC, see:
- The Fed Finally Announced Its CBDC Ideas
- The U.S. Should Disavow CBDCs and Set the Standard for Protecting Financial Privacy
- How Canada Made the Case for Cryptocurrency, Not CBDCs
3. What is the environmental impact of cryptocurrency use?
The environmental cost of cryptocurrencies has been another headline topic. It’s an issue that has come up at nearly every congressional hearing on cryptocurrency and it was even the sole focus of a hearing hosted by the Senate Committee on Energy and Commerce in January so it’s little surprise to see it here.
Continue to the full article --> here
View the White House Executive Order on 'Responsible Development of Digital Assets' --> here
GBBC | Release | March 9, 2022
The much anticipated order seeks to outline a “whole-of-government" approach to "protect consumers, financial stability, national security, and address climate risks,” while ensuring U.S. leadership and competitiveness in the booming digital asset ecosystem.
The signing of this executive order is a watershed moment for blockchain and digital assets, signaling official recognition of the importance of the technology to U.S. national interests, strategy, and global competitiveness. A statement released by NEC Director Brian Deese and National Security Advisor Jack Sullivan stated that the order marked the "intensification of [U.S.] efforts to promote responsible innovation in the digital assets space."
See: Updated Report: Regulation of Cryptocurrency Around the World (Nov 2021)
After nearly a decade of building, evolving, and scaling, the executive order is a major step for the industry in receiving official recognition from the highest level of government in the U.S. The GBBC would like to thank the many leaders, innovators, and advocates who have worked tirelessly to bring the industry to this point and who will continue to innovate as we collectively seek to grow the business of blockchain to create more secure, equitable, and functional societies.
The order lays out several objectives and directives but does not go as far as to announce additional policies, regulations, or positions government agencies should take.
Summary of objectives laid out in the order:
- Protect consumers, investors, and businesses
- Ensuring “safeguards are in place and promot[ing] the responsible development of digital assets.”
- Protect the U.S. and global financial stability
- “Digital asset issuers, exchanges and trading platforms, and intermediaries whose activities may increase risks to financial stability, should, as appropriate, be subject to and in compliance with regulatory and supervisory standards that govern traditional market infrastructures and financial firms.”
- Mitigate illicit finance and national security risks
- Ensure "appropriate controls and accountability for current and future digital assets systems to promote high standards for transparency, privacy, and security — including through regulatory, governance, and technological measures — that counter illicit activities and preserve or enhance the efficacy of our national security tools."
See: US Government Accountability Office Urges Crypto Regulations to Counter Human Trafficking and Drug Cartels
- Reinforce U.S. leadership in the global financial system
- “The United States has an interest in ensuring that it remains at the forefront of responsible development and design of digital assets and the technology that underpins new forms of payments and capital flows in the international financial system, particularly in setting standards that promote: democratic values; the rule of law; privacy; the protection of consumers, investors, and businesses; and interoperability with digital platforms, legacy architecture, and international payment systems.”
- Promote access to safe and affordable financial services
- “The United States has a strong interest in promoting responsible innovation that expands equitable access to financial services, particularly for those Americans underserved by the traditional banking system, including by making investments and domestic and cross-border funds transfers and payments cheaper, faster, and safer, and by promoting greater and more cost-efficient access to financial products and services”
- Support technological advances that promote responsible development and use of digital assets
- Digital asset technologies and ecosystems should include privacy and security in their architecture and reduce negative climate impacts and environmental pollution that occurs from crypto mining.
- Investigation of a U.S. CBDC
- Placing “the highest urgency on research and development efforts into the potential design and deployment options of a United States CBDC.”
Continue to view analysis --> here
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