Huobi Research Institute, the leading blockchain research organization, today published a report, titled “A Deeper Look at Biden’s Executive Order on Digital Assets Regulation.” The report points out the underlying priorities of the U.S. government and analyzes the impact of U.S. President Biden’s executive order on the regulation of digital assets. The report also maps out the importance of each respective agency and department in overseeing different parts of the industry.
According to a Pew Research Center survey, 16% of the U.S. adult population have invested in, traded, or used cryptocurrencies. As cryptocurrencies continue to grow in popularity, more people have called for the U.S. government to adopt a more comprehensive approach to regulating the new asset class. On March 9, President Biden signed an executive order mandating such an approach, calling for 20 different departments and regulatory agencies to focus on different areas of oversight.
For example, the Department of Treasury is the lead agency in charge of studying CBDCs and coming up with proposals and solutions. The Department of Justice and Federal Reserve Board will also work closely with the Department of Treasury on CBDCs, along with a handful of other agencies.
Biden’s Executive Order is Designed to Protect Consumers and Investors
In this report, Huobi Research Institute analyst Barry Jiang argues that the number one goal is to protect consumers, investors, and enterprises – starting by regulating centralized exchanges. Because of their size and potential threat to the broader financial system, centralized exchanges will receive the most scrutiny, and will need to adhere to codes of conduct for data protection and privacy, the protection of investor assets, process design, and risk disclosure.
Defending the country against potential crime and national security risks is also a priority. The executive order demands that the executive agencies and departments complete reports on the illicit financial risks of digital assets and strengthening international law enforcement cooperation within just 90 days. Other reports have longer deadlines of 120 to 180 days.
And yet, areas such as DeFi, peer-to-peer payments, and privacy blockchains will prove much harder for regulators to regulate and control. Stricter KYC standards will need to be implemented, and law enforcement agencies will need to work closely with their counterparts in other countries around the world.
The U.S. Wants to Maintain Its Leading Position in the Global Financial System
Huobi Research Institute points out that such a comprehensive approach to cryptocurrency regulation is designed to help maintain the America’s leading role in the global financial system. The U.S. government is cognizant of the growing role that cryptocurrencies will play going forward, and is eager to use regulation to steer the market in a direction that favors the United States.
Within the cryptocurrency industry, the U.S. is already leading in some areas. For example, the U.S. is already the most attractive country for crypto startups and funding, with U.S. startups having received $14.1 billion in investments in 2021, representing 56% of global crypto funding. But on the other hand, the U.S. has lagged behind in areas, such as the research and development of central bank digital currencies (CBDCs).
To download the full report, click here.
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