The Biden administration has ordered the U.S. government to study the development of a “digital dollar” and cryptocurrency. On Wednesday, U.S. President Joe Biden signed an executive order to assess the risks and benefits of creating a central bank-backed digital dollar, the White House said.
The executive order requires the Treasury Department, Commerce Department, and other government agencies to prepare reports on “the future of money” and the role cryptocurrencies will play on the U.S. economy.
The move follows China’s efforts to create a “digital yuan.”
As detailed by Reuters, oversight of the cryptocurrency market, which surged past the $3 trillion mark last November, is “essential” to ensure national security, financial stability, and competitiveness of the United States in global markets.
Administration officials said that the move is necessary to stave off the growing threat of cybercrime.
Reuters reported that the executive order is a stark acknowledgment of the growing importance of cryptocurrencies like Bitcoin and its ramifications for U.S. and global financial systems.
“The growth in cryptocurrencies has been explosive,” said Daleep Singh, deputy national security advisor for economics to CNN.
The development of cryptocurrencies and other digital assets will impact how people will access banking, whether consumers are safe and protected from volatility and the primacy of the U.S. dollar in the global market.
In a statement, Biden administration officials said that Biden’s executive order is an effort to promote responsible innovation while mitigating risk to consumers, investors, and businesses.
“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,” said Brian Deese, director of the National Economic Council, and Jake Sullivan, White House national security adviser.
As detailed by the White House, a key measure in the order directs the government to assess the technological infrastructure required for a potential U.S. Central Bank Digital Currency (CBDC), or a “digital dollar.”
“We've got to be very, very deliberate about that analysis because the implications of our moving in this direction are profound for the country that issues the world's primary reserve currency,” said one Biden administration official.