The Biden administration is planning to issue an executive order this week that would compel federal agencies to come up with a unified plan to regulate cryptocurrencies, according to reports from Bloomberg News (opens in new tab), which broke the story, and The Wall Street Journal (opens in new tab).
The order would not immediately create new rules and regulations for cryptocurrency transactions. But it would spur the various agencies involved to figure out what such regulations might do, and report back to the White House within three to six months. Most regulations would then have to be created by Congress.
"This is the starting gun," an unnamed source told Politico (opens in new tab).
Everyone's getting involved
The Department of State and the Department of Commerce were the only two agencies named in the Bloomberg report. The WSJ also mentioned the the Securities and Exchange Commission, the Federal Trade Commission, the Financial Stability Oversight Council, the Department of Justice and the Department of the Treasury, the last of which oversees the Internal Revenue Service.
Politico also named the Department of Homeland Security, the Office of Management and Budget and the Office of the Director of National Intelligence, which oversees the CIA and NSA. The Environmental Protection Agency and the Department of Energy are also likely to become involved, as the WSJ said the Biden order will examine the sustainability of energy-hungry cryptocurrency mining.
There is concern that Russia could use cryptocurrency as a means to evade economic sanctions, as Iran and Venezuela already do. The Financial Crimes Enforcement Network yesterday issued a "FinCEN alert (opens in new tab)" warning financial institutions of Russian attempts to move money.
However, the Biden administration has been working on this executive order for a few months, according to an earlier Bloomberg story (opens in new tab).
Trying to untangle a mess of regulations
At the moment, federal regulation of cryptocurrency is disorganized, with different agencies controlling various areas while leaving a lot of loopholes. Bloomberg said the financial industry wants a more unified approach to cryptocurrency regulation.
Bloomberg's unnamed sources said that the executive order would also examine the "national security and economic impact" of cryptocurrencies, which could draw in the Department of Defense and the Federal Reserve. Bloomberg said that the White House declined to comment on the issue when asked.
Bloomberg said the Fed was still studying the idea of a government-backed cryptocurrency, otherwise known as a Central Bank Digital Currency (CBDC) (opens in new tab), an effort that was launched in January (opens in new tab). The Fed said then that a U.S. CBDC might be necessary (opens in new tab) to protect the U.S. dollar's position as a global currency.