Tl; dr: Bitcoin bad, CBDC good...
Following U.S. President Biden’s executive order, the White House published a framework for CBDC development and strict regulation of the ecosystem.
The White House has published a legal framework for engaging with bitcoin and cryptocurrencies in the U.S. following a “whole of government” executive order (E.O.) from President Joe Biden earlier this year, per an official press release. The framework consists of seven sections:
(1) Protecting Consumers, Investors, and Businesses;
(2) Promoting Access to Safe, Affordable Financial Services;
(3) Fostering Financial Stability;
(4) Advancing Responsible Innovation;
(5) Reinforcing Our Global Financial Leadership and Competitiveness;
(6) Fighting Illicit Finance;
(7) Exploring a U.S. Central Bank Digital Currency (CBDC).
The “Ensuring Responsible Development of Digital Assets” E.O. called on government agencies to produce varying forms of research regarding consumer privacy and protection, energy usage, and central bank digital currency (CBDC) benefits and risks.
In accordance with the research provided, the White House intends to empower the Securities and Exchange Commission (SEC) and the Commodities Futures Trading Commission (CFTC) to “aggressively pursue investigations” in the digital asset space.
Additionally, Biden’s administration will push the Consumer Financial Protection Bureau (CFPB) and the Federal Trade Commission (FTC) to “redouble their efforts to monitor” the ecosystem as it relates to “unfair, deceptive, or abusive practices.”
However, it is unclear what enables the determination of whether or not these agencies will begin monitoring for the aforementioned malicious behavior.
Continuing on, the framework also calls on agencies to begin accepting “instant payment systems,” such as FedNow and the consideration of regulating non bank payment providers.
Furthermore, the National Science Foundation (NSF) will research “technical and socio-technical disciplines and behavioral economics” in order to understand digital asset ecosystems.
Following a recent report from the White House Office of Science and Technology Policy (OSTP), the Department of Energy (DoE) and the Environmental Protection Agency (EPA) are being tasked with “tracking digital assets’ environmental impacts; developing performance standards as appropriate; and providing local authorities with the tools, resources, and expertise to mitigate environmental harms.”
In addition, the Bank Secrecy Act will be amended to apply to digital assets, leading to larger fines for unlicensed money transfers and stricter enforcement against digital asset service providers.
Also, the U.S. Treasury department will complete a risk assessment as it relates to decentralized finance (De-Fi).
Finally, and perhaps most importantly, Biden’s administration has developed “Policies for a U.S. CBDC System,” which details the government’s priorities as it relates to the release of a digital dollar. However, the release states that “further research is needed”.
Agencies that were chosen to lead the ongoing working group for the research and possible development of a CBDC include the Federal Reserve, the National Economic Council, the National Security Council, the Office of Science and Technology Policy, and the Treasury Department.