President Joe Biden is reportedly expected to sign a long-awaited executive order this week outlining the government’s strategy on cryptocurrencies as concerns rise about Russia’s use of digital currencies to evade sanctions.
The order, which has been in the works long before Russia’s invasion of Ukraine, sets a 180-day deadline for a series of reports on “the future of money,” which are expected to describe what government agencies, including the Treasury Department, need to do to create policies and regulations on digital currencies, Reuters reported.
“We could see a significant shift in policy in 180 days. This is a likely step toward creation of a central bank digital currency,” a source familiar with the matter told Reuters, citing increased support for such a measure within the Biden administration.
The White House order is expected to consider the possibility of a federal government-backed digital currency by asking the Justice Department to look into whether a new law is needed to create a new currency while the Federal Trade Commission, the Consumer Financial Protection Bureau, and other federal agencies are asked to study the impact it could have on consumers.
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The Federal Reserve is studying the possibility of a central bank digital currency, or CBDC, because it could help strengthen the dollar’s dominance in global markets and allow the United States to compete with other countries, such as China, that have quickly embraced the technology.
The order implicitly indicates the mainstream acceptance of cryptocurrencies within financial markets and within the U.S. economy and its growing role in the years to come.
Cryptocurrencies make up a small share of business transactions, the Treasury Department noted, but a huge increase in cryptocurrency investing in the past year suggests digital coin use could become more frequent.
The Biden administration’s policies in regards to digital currencies have drawn increased attention recently due to the U.S.’s sanctions on Russia, creating fear among some economists that the Russian government and certain organizations could get around the sanctions by using digital coins.
Most cryptocurrency transactions are pseudoanonymous because they obscure the identities of those trading coins, but the blockchain technology that enables cryptocurrencies uses a public ledger that allows for less privacy than some may realize.
“We will continue to look at how the sanctions work and evaluate whether or not there are liquid leakages and we have the possibility to address them. I often hear cryptocurrency mentioned, and that is a channel to be watched,” Treasury Secretary Janet Yellen said last week.
Furthermore, on Monday, Treasury Department’s Financial Crimes Enforcement Network issued an alert warning banks and financial institutions to be “vigilant” against those who attempt to get around sanctions levied due to Russia’s war in Ukraine.
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“Although we have not seen widespread evasion of our sanctions using methods such as cryptocurrency, prompt reporting of suspicious activity contributes to our national security and our efforts to support Ukraine and its people,” Him Das, the acting director of FCEN, said in a statement.
