White House on Crypto

Brian Zwerner
3 min readSep 20, 2022

Back in March, the Biden Administration issued an Executive Order on Ensuring Responsible Development of Digital Assets. The goal of this was to get multiple government agencies working together to understand the risks and benefits of the Crypto industry. The Executive Order instructed nine agencies to work across six key areas: consumer and investor protection; promoting financial stability; countering illicit finance; U.S. leadership in the global financial system and economic competitiveness; financial inclusion; and responsible innovation. The Administration issued a Comprehensive Framework for the industry last week. Let’s review here.

The report starts with consumer protection as its first focus area. The report encourages both the SEC and CFTC to “aggressively pursue investigations and enforcement actions”. Unfortunately, the Administration failed to clarify which agency should take the lead or to better define where each agency is empowered to get involved. This has led to confusion in the marketplace as SEC Chair Gary Gensler has been hostile to the industry while the CFTC has been more open minded. In a recent speech, Gensler said “Of the nearly 10,000 tokens in the crypto market, I believe the vast majority are securities”. This would require most Cryptocurrencies to register as securities with the SEC. However, a recent bill in Congress would give the more industry-supportive CFTC oversight over most of tokens. This was a missed opportunity by the Biden Administration to make their opinions known on this important question.

The report later discusses a directive to fight illicit finance. There is an interesting discussion on expanding the Bank Secrecy Act to digital asset exchanges and NFT platforms. Also discussed is raising the penalties for unlicensed money transmitting. These two areas could bring significant registration or reporting requirements to wallets and exchanges, and thus bears watching.

The second area addressed in the report discussed access to safe, affordable financial services. This section was used to promote the Federal Reserves new same day cash clearing FedNow coming next year. No real talk of how Crypto can revolutionize the movement of money with its instantaneous processing, another miss. The third area covered was fostering financial stability. Not much said here. Just an order for the U.S. Treasury to evaluate systemic risks from the Crypto industry.

Up next are two sections on promoting responsible innovation and reinforcing the American’s global financial leadership. There is some nice encouragement in here for multiple government agencies to support the industry. The Administration also pushes government agencies to coordinate with their overseas counterparts on these issues.

The report wraps with a discussion around exploring a Central Bank Digital Currency (CBDC). This would be some type of officially sanctioned stable coin that would operate on Crypto rails. The report has an encouraging start by saying CBDCs have the “potential to offer significant benefits”. It continues by saying “the Administration encourages the Federal Reserve to continue its ongoing CBDC research, experimentation, and evaluation”. This is great and could be a real win for the marketplace if the U.S. takes a leadership position with CBDCs.

Overall, it is good to see the Biden Administration making a meaningful effort to support the Crypto industry. While I would love to see clarity on what tokens are securities and who should regulate the industry, this is a decent start. Hopefully after the midterm elections, these issues will move to center stage.

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Brian Zwerner

Writing about Crypto and web3 for business executives