US President Biden Administration will study the Digital Dollar and Crypto Risks

“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.

US President Biden Administration will study the Digital Dollar and Crypto Risks

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 USD$ 42,280, on track for its largest percentage gain since Feb. 28.

“Wide-ranging oversight of the cryptocurrency market, which surged past USD$ 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 cybercrime”, administration officials said.

US President Biden Administration will study the Digital Dollar and Crypto Risks
Wide-ranging oversight of the cryptocurrency market is essential to ensure U.S. national security”

Analysts view the long-awaited executive order as a stark acknowledgment of the growing importance of cryptocurrencies and their potential consequences for the U.S. and global financial systems.

“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 (the United States National Security Advisor), said in a statement.

US President Biden Administration will study the Digital Dollar and Crypto Risks

“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.

Administration officials said the United States was taking great care to decide whether – and how – to move forward with developing a digital dollar, given the dollar’s role as the world’s primary reserve currency.

Nine countries have launched central bank digital currencies. 

16 others – including China – have begun the development of such digital assets, according to the Atlantic Councilleading some in Washington D.C. to worry that the dollar could lose some of its dominance to China.

US President Biden Administration will study the Digital Dollar and Crypto Risks
China is developing the Chinese yuan and Crypto Risks before the US

Asked whether China could develop a competitive advantage if it moved sooner, an administration official said “the U.S. would monitor developments to maintain the centrality of the dollar in the global economy”.

The order of Joe Biden asks for over a dozen reports, including by the US Securities and Exchange Commission and the Consumer Financial Protection Bureau, to assess the risks of trading cryptocurrencies, and consumer protection.

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