Digital Dollar, a Done Deal?
Michaël Renotte I 6:26 pm, 10th March
Many crypto afficionados were pleasantly surprised when the White House released its "Executive Order on Ensuring Responsible Development of Digital Assets" on Wednesday, marking the first time the U.S. Administration has weighed in formally on cryptocurrencies. The order recognizes the popularity of cryptocurrencies and prompts the U.S. Department of the Treasury and other federal agencies to coordinate their efforts to come up with a regulatory plan.
In a LinkedIn post, best-selling author of "Cashless" and "Innovation Lab Excellence" Richard Turrin doesn't hesitate to take the step of stating that "this (upcoming) report will give birth to a digital dollar CBDC". To prove his case, Richard Turrin refers to two critical sections in the executive order that "will ensure a digital dollar". Sections v and vii of the document call for an analysis of "the extent to which foreign CBDCs could displace existing currencies and alter the payment system in ways that could undermine United States financial centrality" and for "an assessment of the effects that the growth of foreign CBDCs may have on United States interests generally".
According to Turrin, these report sections can only have the following conclusions: "foreign CBDC could potentially undermine the U.S. dollar’s financial centrality by providing a dollar alternative", and "foreign CBDC growth could potentially impair U.S. interests if the U.S. does not have a digital currency to counter their influence, and/or dollar-based systems are bypassed by their adoption".
Thorough and in-depth analysis
The fact is that the order tasks a variety of agencies with studying and planning around cryptocurrency policy in key areas like consumer protection, national security, and illicit finance. It also urges the Federal Reserve to continue exploring the development of a U.S. Central Bank Digital Currency (CBDC), a digital U.S. dollar that would be widely available to the general public, and could make digital transactions more secure, faster and cheaper.
The tone of the executive order itself is evident from the very first line of the fact sheet, which comments on the "explosive growth" of digital assets. The order then declares that the U.S. "must maintain technological leadership in this rapidly growing space".
Of course, the executive order is not uniformly positive: It lays out the many risks of cryptocurrencies, including the prevalence of scams, its use in illicit finance, and environmental concerns.
A united front for regulation
Over the last couple of years, different governmental agencies have pushed for the authority to regulate cryptocurrencies, including the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). While the order doesn’t specifically say who is in charge, it calls on the various regulators to create a united front and to determine spheres of influence, and a chain of command.
Wait and see
The issue of Central Bank Digital Currencies (CBDCs) is a controversial one in the crypto community. While having a government-issued digital currency could be useful to foster greater access to the financial system, many feel it would run counter to crypto’s decentralized ideals. The U.S. president's order doesn’t make a declaration in either direction, but does call for a study into whether a CBDC would "enhance or impede" financial systems and the power of the U.S. dollar.
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