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Biden issues executive order on crypto regulation, proposes stablecoins

President Joe Biden has issued an executive order outlining a series of potential new regulatory policies for cryptocurrencies and digital goods. The Order urges a focus on regulatory enforcement, in an attempt to break away from the current patchwork approach and provide the parallel goals of protecting consumers and minimizing the financial and human costs of abuse. use electronic money.

The main promise of cryptocurrencies – the ability to conduct business securely without depending on the financial sector – is seen by many as a positive, but critics have pointed out that it is a heavily regulated market and cryptocurrency used too often for illicit drug transactions. , weapons and more.

One of the proposals in the order that would see the creation of a Central Bank Digital Currency (CBDC), backed by the Federal Reserve, has been Consider the possibility of creating a cash-backed cryptocurrency in a number of years. The administration says it sees several upsides in establishing a US CBDC, including greater inclusion in the financial system (as it has the potential to help unbanked people move money) and facilitate cross-border payments. This is the so-called “stablecoin”, which has been tested by major financial institutions such as JP Morgan and Wells Fargo – it has the same portability as other typical cryptocurrencies like Bitcoin and Dogecoin, but it indexed to the value of real-world cash, rather than subject to price fluctuations.

Another proposal calls for more agencies to provide in-depth research on the effects of new regulations designed to limit the use of cryptocurrencies for illegal purposes, as well as the potential impacts. financial markets, competition policy and cybersecurity.

In a statement, Treasury Secretary Janet Yellen – whose department will play a key role in much of the expected progress in the executive order – praised the new policies.

“This approach will support responsible innovation, which can have significant benefits for countries, consumers and businesses,” she said.

US lags in crypto regulation

According to Martha Bennett, vice president and principal analyst at Forrester Research, the order overall represents a long-overdue change and could help bring US regulation of cryptocurrencies into line. more in line with European efforts, said Martha Bennett, vice president and principal analyst at Forrester Research.

“The US is actually quite late in thinking about how to approach this. The EU, for example, is in the final stages of actually passing crypto legislation,” she said. “It’s long overdue, both from a stability and consumer protection standpoint.”

According to Bennett, crypto regulation in the US has been affected by a lack of centralization – the IRS treats digital assets as taxable property, while the SEC treats them like securities, for example.

“More clarity would be helpful, and what I read between the lines in this order is really an incentive for different regulators to work together, because that’s confusing,” he said. she said.

Additionally, the introduction of a US-backed stablecoin could benefit both consumers and businesses, giving them a new, streamlined system for payments and remittances.

“In the US in particular, both internal payment systems are horribly outdated, and globally, they’re completely Stone Age,” says Bennett.

Copyright © 2022 IDG Communications, Inc.

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Fry Electronics Team

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