Policy & Regulation

Biden’s Executive Order Signals the United States’s Commitment to Responsible Innovation in Crypto

Chainalysis welcomes today’s executive order (“EO”) on “Ensuring Responsible Development of Digital Assets.” We have provided critical services to the US and other governments since our launch in 2014, and are excited to build upon this partnership as they tackle new challenges in this rapidly growing ecosystem.

With that in mind, let’s unpack what we take to be the three key messages from today’s executive order.

1. Expanding America’s global leadership in digital assets

Today’s EO recognizes that the United States is “a global leader” in the development and adoption of digital assets, and represents an earnest effort to expand from this position. To realize the benefits of digital asset technology, the EO names the following policy objectives (among others):

  • Expand access to safe and affordable financial services
  • Reduce the cost of domestic and cross-border funds transfers and payments
  • Encourage responsible innovation and payments modernization

2. Ensuring financial stability, preventing illicit activity, and protecting national security

On the subject of financial stability, the EO requests that “within 210 days of the date of this order,” the Secretary of the Treasury should convene the Financial Stability Oversight Council (FSOC) and produce a report outlining the specific financial stability risks and regulatory gaps posed by various types of digital assets. This report is also expected to provide recommendations to address such risks.

On the subject of illicit activity and national security, the EO calls on the Secretary of the Treasury, in consultation with a number of other agencies, to develop a coordinated action plan for mitigating digital-asset-related illicit finance and national security risks.

3. Taking the lead on CBDC R&D

(Read: Central bank digital currency research and development.)

“My Administration places the highest urgency on research and development efforts into the potential design and deployment options of a United States CBDC,” the EO reads. “These efforts should include assessments of possible benefits and risks for consumers, investors, and businesses; financial stability and systemic risk; payment systems; national security; the ability to exercise human rights; financial inclusion and equity; and the actions required to launch a United States CBDC if doing so is deemed to be in the national interest.”

Unsure what the risks and benefits may be? Read our primer on CBDCs.

How we can work together to innovate responsibility

Chainalysis commends the constructive tone taken by the EO and the balanced approach to weighing both the opportunities of digital technology as well as the risks that have hindered adoption. We believe we can play a key support role as the federal government coordinates to mitigate illicit finance and national security risks.  Chainalysis looks forward to continuing our dialogue with US policymakers as they undertake the important work of developing a government-wide approach to incorporating digital asset technology into their remit. Through this work, policymakers can provide a clear path for digital asset innovators to deliver products and services that will ensure “that the benefits of financial innovation are enjoyed equitably by all Americans.”