At a glance.
- White House issues EO on digital assets.
- EU clarifies that Russian sanctions include digital assets.
- US SEC amends 8-K reporting rules.
White House issues EO on digital assets.
Yesterday US President Joe Biden issued an executive order on “Ensuring Responsible Development of Digital Assets.” The EO is groundbreaking, the press release says, as “the first ever, whole-of-government approach to addressing the risks and harnessing the potential benefits of digital assets and their underlying technology.” As the handy fact sheet explains, digital assets like crypto have surged in recent years, swelling from $14 billion globally five years ago to over $3 trillion as of last November, and the EO represents the White House’s effort to support digital currency innovation while also protecting individuals, companies, and the global economy from the inherent risks.
The EO directs the Department of the Treasury and agency partners to recommend policy addressing how digital currency could impact financial markets, and urges regulators to protect against any systemic risks the rise in digital assets could present. Biden also advises the Financial Stability Oversight Council to alleviate any regulation gaps, and urges agencies to establish rules impeding the use of cryptocurrency for illicit transactions like money laundering. JD Supra notes that cracking down on money laundering will necessitate a multi-agency approach, requiring the Financial Crimes Enforcement Network, the Securities and Exchange Commission, the Commodity Futures Trading Commission, the Consumer Financial Protection Bureau to coordinate their efforts. Federal banking regulators will have to find a way to work together to create clear, concise rules, a difficult task.
The Department of Commerce has been tasked with making the US a competitive leader in digital asset tech, and the Secretary of the Treasury with producing a report on the future of currency systems, “to include implications for economic growth, financial growth and inclusion, national security, and the extent to which technological innovation may influence that future.” Biden also highlights the need to create responsible digital asset systems that prioritize privacy and security while reducing negative impact on the environment, and he directs the government to research the development of a US Central Bank Digital Currency (CBDC) – in other words, the creation of a digital dollar.
Secretary of Commerce Gina Raimondo released a statement applauding Biden’s approach, stating, “I particularly welcome President Biden’s direction to engage with industry, civil society, and other interagency partners in developing a framework to promote US economic competitiveness by leveraging digital asset technologies and remain eager to hear what we can do to promote the secure and inclusive development of this growing part of our financial services system.” The Wall Street Journal reports that bitcoin prices surged as cryptocurrency proponents also praised the EO, noting it praised the benefits of digital currency while failing to suggest any imminent federal action to curtail the market. Faryar Shirzad, chief policy officer at the US’s largest crypto exchange, Coinbase Global, tweeted, “We applaud the White House for recognizing this as a defining moment for U.S. innovation on the world stage.”
On the other side of the coin (pun intended), crypto skeptics feel the EO is a move in the wrong direction, as it will likely delay any concrete policy changes until after this year’s midterm elections. Duke University School of Law’s Global Financial Markets Center executive director Lee Reiner said, “Leading up to this executive order, the narrative that had been circulating was that the administration was set to crack down on crypto… This executive order is a complete 180 from that. This is as close to an embrace of crypto as you could have hoped for from this Biden administration, if you’re pro-crypto.”
Tom Gann, Chief Public Policy Officer at Trellix, sees the EO as, among other things, a sign of the increased mainstreaming of digital assets:
“Digital assets and crypto are becoming mainstream. Major financial institutions and some countries are embracing crypto to digitally buy and sell products and services. Today, crypto is being used for both valid and illicit transactions. The development of the crypto economy is happening in an unregulated environment, and that is rarely good for investors, businesses, and consumers. We welcome the President’s executive order on Ensuring Responsible Innovation in Digital Assets. The U.S. government needs to understand and mitigate the risks that exist today, while exploring the innovation that might drive the creation of sovereign currencies.
"Trellix encourages government agencies to use this opportunity to reduce the ability of malicious actors to leverage crypto to profit from illegal activities. It is time to lay a transparent foundation that shines the light on illicit uses of crypto for the betterment of the future we see coming.”
EU clarifies that Russian sanctions include digital assets.
On the topic of crypto, the EU yesterday announced that the recent sanctions placed on Russia and Belarus for Russia’s invasion of Ukraine include digital currency. An EU official told CoinDesk, “Today’s package clarifies that crypto assets fall under the scope of ‘transferable securities.’ This was already the case but today’s text makes this point clearer.” The EU also expanded sanctions on Belarus for its involvement in the invasion, restricting SWIFT services to three Belarusian banks and prohibiting transactions with the Central Bank of Belarus.
US SEC amends 8-K reporting rules.
The Register reports that the US Securities and Exchange Commission (SEC) has proposed a new rule amending the current Form 8-K reporting requirements that would order public companies to report cyberattacks within four days of discovery. The rule would also require companies to submit periodic reports on their risk management plans and provide updates about previously undisclosed incidents. SEC Chair Gary Gensler explained, "Today, cybersecurity is an emerging risk with which public issuers increasingly must contend. Investors want to know more about how issuers are managing those growing risks…I think companies and investors alike would benefit if this information were required in a consistent, comparable, and decision-useful manner."