U.S. Executive Order outlines comprehensive national policy for digital assets

(1) protecting consumers, investors and businesses; (2) protecting financial stability and mitigating systemic risk; (3) mitigating illicit finance and national security risks; (4) maintaining U.S. leadership in the global financial system and economic competitiveness; (5) promoting financial inclusion; and (6) fostering responsible innovation. In particular, the EO directs several Cabinet departments, all major financial services regulators, and other offices and officials beyond financial services to participate in a broad interagency effort to implement the policy objectives outlined in the EO. The EO notes that, although many activities involving digital assets are already within the scope of existing domestic laws and regulations, growing development and adoption of digital assets and related innovations, as well as inconsistent controls to defend against certain key risks, necessitate an evolution and alignment of the U.S. government approach to digital assets. Among other things, the EO is notable for its statement that the Biden Administration places the highest urgency on research and development efforts into the potential design and deployment options of a U.S. central bank digital currency (CBDC), with a focus on showcasing U.S. leadership and participation in international forums and pilot projects involving CBDCs.

This EO itself is neither a law nor a change in regulation; for now, market participants need only to anticipate the future agency reports as they are issued, as well as any ensuing actions. For your convenience, we have set out the various required reports and their respective deadlines in the below chart on EO Digital Assets Reporting Deadlines. We caution that while the EO signals this Administration's interest in whole-government coordinated policies addressing digital assets, it does not preclude enforcement actions taken by various federal agencies based on traditional financial regulations in the interim.

Market participants can view the EO as this Administration's acknowledgment of a future for digital assets in the U.S. markets. We also observe that several of the reporting deadlines fall in the immediate run-up to the 2022 U.S. midterm elections, and that any ensuing rulemaking activity would likely take place following the elections. The actual implementation of any proposals contained in the future reports is a process that is likely to stretch into 2023 and possibly beyond.