Crypto assets rallied on Wednesday as US President Joe Biden signed an executive order requiring several arms of government to explore the risks and opportunities of launching a digital dollar and other issues surrounding private cryptocurrencies.
But while the industry’s worst fears of a crackdown on crypto assets were assuaged, the order also represents kicking the can down the road while other territories, such as Dubai, push on with creating an environment that makes it clear they want to attract blockchain entrepreneurs to their shores.
Biden’s order will require the Treasury Department, the Commerce Department and other key agencies to prepare reports on “the future of money” and the role cryptocurrencies will play.
The order establishes an executive branch working group and commissions around 21 reports, approximately 13 of which focus on enforcement, while seven deal with a central bank digital currency and one addresses economic competitiveness.
Wide-ranging oversight of the cryptocurrency market, which surged past $3 trillion in value in November, is essential to ensure US national security, financial stability and US competitiveness, and stave off the growing threat of cyber-crime, administration officials said.
The same day, Dubai’s ruler Sheikh Mohammed bin Rashid Al Maktoum announced the creation of a regulatory and licensing authority for crypto assets.
“The future belongs to whoever designs it,” he tweeted. “Today, through the virtual assets law, we seek to participate in the design of this new and rapidly growing global sector.” The independent authority will “oversee the development of the best business environment in the world for virtual assets in terms of regulation, licensing, governance, and in line with local and global financial systems,” he said.
The Securities and Commodities Authority of the UAE issued a statement on Tuesday saying it was nearing the issuance of a regulatory framework related to digital assets.
A risk for the US is that it falls behind at a crucial moment in the development of the digital economy.
“We’re at a pivotal time in history where the world is watching how digital assets are being used in nation-building and how digital assets are creating transparency into financial transactions like never seen before,” said Lance Morginn, president and cofounder of Blockchain Intelligence Group. “If the US government takes too long to adopt policies toward digital assets, they run the risk of the industry moving to other financial capitals that are prioritizing blockchain technology.”
To be sure, the US, as custodian of the world’s major reserve currency, has some unique challenges and responsibilities when it comes to financial stability. There are also political concerns.
“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,” Brian Deese, director of the National Economic Council, and Jake Sullivan, White House national security adviser, said in a statement.
However, if the US becomes a laggard in the digital economy, it won’t benefit anyone.