Crypto investors in the US have been anxiously awaiting Biden’s executive order on cryptocurrency for a few months now to see what it might mean for the market. Today on the 9th of March 2022, it’s finally been signed by President Biden. Find out everything you need to know about the crypto executive order and what it might mean for your investments - including your taxes.
What is the crypto executive order?
An executive order is a directive signed in by the President of the United States that manages operations of the government at a federal level. In this instance, it’s President Biden signing an executive order on cryptocurrency in the US.
President Biden's executive order on cryptocurrency is an all-encompassing government directive. This means it’s not just one department or agency looking into crypto - but a government wide directive to examine crypto and its current role and regulation in the US. This includes directives for the Department of Treasury (including the IRS), the Department of Commerce, the Department of Justice and other relevant government agencies.
US Secretary of the Treasury, Janet L. Yellen said, "President Biden’s historic executive order calls for a coordinated and comprehensive approach to digital asset policy. This approach will support responsible innovation that could result in substantial benefits for the nation, consumers, and businesses. It will also address risks related to illicit finance, protecting consumers and investors, and preventing threats to the financial system and broader economy.”
What’s in the crypto executive order?
While some were expecting the worst - from what we’ve seen so far (including a bullish BTC price jump today), it looks like it could actually be mostly good news.
The order begins by outlining the need for a "whole-of-government" response to the crypto industry, citing the $3 trillion market cap and the mainstream adoption of crypto in the US.
The purpose of the executive order is to research and subsequently create an all-encompassing strategy to address seven key priorities within 180 days:
- Consumer and investor protection.
- Financial stability.
- Illicit finance.
- US leadership in the global financial system.
- Financial inclusion.
- Responsible innovation.
- CBDC research and development.
Let's take a quick look at the measures for each as highlighted in the order.
Consumer and investor protection
This section directs the Department of the Treasury and other agency partners to research and develop policy recommendations for the crypto industry to protect consumers, investors and businesses.
This section directs the Financial Stability Oversight Council to research and identify financial risks posed by the crypto industry and develop subsequent policy recommendations.
Illicit finance and national security
This section directs the relevant US government agencies - including the Department of Justice - to create a coordinated approach with allies and partners to mitigate illicit financial risks and national security risks that arise as a result of the crypto industry. This is the section that will focus on developing policy to discourage crypto tax evasion, fraud, money laundering and other criminal activities.
US leadership in the global financial system
This section directs the Department of Commerce to establish a framework to drive US competitiveness and leadership in the fintech and crypto industries.
This section directs the Secretary of the Treasury, alongside other relevant agencies, to produce a report on the future of finance and payment systems to promote access to safe and affordable financial services, including digital asset innovation.
This section directs the US government to research, report and develop policies around the responsible development, design and implementation of crypto technology to reduce environmental impact while prioritizing privacy and security.
CBDC research and development
Finally, the executive order directs the US government to research and potentially develop a United States CBDC.
What does the crypto executive order mean for the market?
Nothing is changing imminently - but the language used in the crypto executive order was a far cry from the doom and gloom many investors expected and may actually help provide some clear, comprehensive guidance on crypto in the US in much needed sectors (like crypto tax).
The order sets a 180-day deadline for reports and subsequent policy recommendations. Any policies recommendations developed will still need congressional approval.
As well as a potential CBDC, there is a possibility that policies could recommend a federal approach to crypto exchange regulation. While on the face of it, this doesn’t sound like great news, many states had already developed their own regulations for crypto exchanges, creating confusion and uncertainty for US investors.
With the involvement of so many government agencies, including the Department of Treasury (and the IRS), the policy recommendations could provide some much needed clarity for investors and their tax obligations after the confusion that arose from the Infrastructure Bill and America COMPETES Act.
We’ll update this article as soon as we know more.