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March 9 (UPI) -- President Joe Biden signed an executive order on Wednesday creating a national policy that addresses the risk and benefits of cryptocurrencies and other digital assets and the technology related to them. The order directs federal agencies to study the impact of cryptocurrency on financial markets and national security, and also urges the Federal Reserve to explore whether it should create its own cryptocurrency.
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The order establishes policy for digital assets from the point of six priorities -- consumer and investor protection; financial stability; illicit finance; U.S. leadership in the global financial system and economic competitiveness; financial inclusion; and responsible innovation.
"Digital assets, including cryptocurrencies, have seen explosive growth in recent years, surpassing a $3 trillion market cap last November and up from $14 billion just five years prior," the White House said in a statement.
"Ensuring responsible innovation and evolution of the digital asset ecosystem is essential to our national security, financial stability, economic competitiveness and continued global leadership," a senior administration officials told reporters.
"Without oversight, the explosive growth in cryptocurrency use would pose risks to Americans and to the stability of our businesses, our financial system, and our national security."
Setting up national policies on cryptocurrencies and other digital assets has taken on new urgency since Russia's war in Ukraine. Last week, Sens. Elizabeth Warren of Massachusetts, Mark Warner of Virginia, Sherrod Brown of Ohio Jack Reed of Rhode Island sent a letter to Treasury Secretary Janet Yellen raising concerns about the potential use of cryptocurrency to evade sanctions.
"The rise in digital assets creates an opportunity to reinforce American leadership in the global financial system and at the technological frontier, but also has substantial implications for consumer protection, financial stability, national security, and climate risk," the White House added on Wednesday.
"The United States must maintain technological leadership in this rapidly growing space, supporting innovation while mitigating the risks for consumers, businesses, the broader financial system and the climate."
The order calls for the Federal Reserve to determine whether it's appropriate to create its own cryptocurrency, a move that several countries are considering.
"[Biden's order] directs relevant departments and agencies to initiate research into the merits of a U.S. central bank digital currency, including an assessment of possible risks and benefits to consumers," the senior official said. "That effort will also lay out the measures that are needed to establish a central bank digital currency, or CBDC, should there be a determination that doing so is in the national interest."
Biden's order comes amid some concern that Russia will use cryptocurrencies to dodge sanctions for the war in Ukraine, which is in its third week. The United States, Europe and Japan are all considering measures to limit that prospect.
