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On Wednesday, the Biden administration released its long-awaited executive order on cryptocurrencies, giving a broad roadmap of the government's plans to review and research digital currencies across six key areas: (1) consumer and investor protection; (2) financial stability; (3) illicit finance; (4) U.S. leadership in the global financial system and economic competitiveness; (5) financial inclusion; and (6) responsible innovation.

The White House said that 16% of Americans, or almost 40 million citizens, now invest in or use cryptocurrencies, allowing the sector to boast a $3 trillion market capitalization last November. The Biden administration hopes to be at the forefront of global innovation on policies around digital assets while safeguarding protections for consumers and preventing illicit financing for terrorism.

“The United States must maintain technological leadership in this rapidly growing space, supporting innovation while mitigating the risks for consumers, businesses, the broader financial system, and the climate,” the White House said.

It will do this by asking different agencies and departments of the government to create policy recommendations on cryptocurrency and improve regulatory oversight to guard against systemic financial risks. It will also ask the Financial Stability Oversight Council, created in 2010 by the Dodd-Frank Wall Street Reform and Consumer Protection Act, to identify and reduce these risks by designing policy recommendations around cryptocurrency regulations.

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The “whole of government” approach will see coordinated action around virtual currencies, particularly around the problems of systemic financial risks, terror financing, and anything deemed to be a national security risk.

“This approach will support responsible innovation that could result in substantial benefits for the nation, consumers, and businesses,” said U.S. Treasury Secretary Janet Yellen. “It will also address risks related to illicit finance, protecting consumers and investors, and preventing threats to the financial system and broader economy.”

Yellen’s department has been tasked with developing a report on the future of money and payment systems, including the ability of cryptocurrencies to advance greater financial inclusion in the American economy.

National Economic Council Director Brian Deese and National Security Advisor Jake Sullivan also commented that the executive order would help the government promote U.S. global competitiveness overseas and play “a leading role in the innovation and governance of the digital assets ecosystem at home and abroad.”

The government will also explore the viability of a digital dollar, or central bank digital currency (CBDC), and the attendant technological infrastructure in a way that still "protects Americans’ interests,” the White House said, pointing out that more than 100 countries across the globe are already trialing or looking at CBDCs.