Biden signs an executive order to review the US getting its OWN digital dollar and a study of how cryptocurrency impacts the economy and national security
- President Joe Biden has signed an executive order to regulate, for the first time, how cryptocurrency is traded
- US Treasury and federal agencies will study impact of cryptocurrency on financial stability and national security
- Comes as worries emerge Russia could use the digital currency to get around crippling sanctions imposed for invading Ukraine
- But Biden administration has argued Russia won't be able to make up for the loss of US and European business
- The order was already in the works before Russia launched its war in Ukraine
- It could be met with opposition from anti-regulation Republicans
President Joe Biden signed an executive order Wednesday urging the Federal Reserve to explore creating its own digital currency in a move to regulate cryptocurrency trading amid fears Russia may use it to evade crippling economic sanctions.
The Biden administration views the explosive popularity of cryptocurrency as a call for acting with urgency to look at the risks and benefits of digital assets, a senior administration official who previewed the order said.
Anti-regulation Republicans are already rebuffing the move to put restrictions on the industry, even though Bitcoin traded nine percent higher at $42,118.73 on Wednesday when the news was announced.
'Crypto is one of the only ways to securely and reliably get funds into Ukraine,' Republican Minnesota Representative Tom Emmer tweeted. 'Let's focus on that & not spew misinformation that has been discredited by Treasury officials.'
He said that US-regulated crypto exchanges are already compliant with sanctions, which he claims should lead to fostering 'crypto innovation domestically and not push it offshore.'
Upon hearing news of the impending order, a conservative writer tweeted: 'And that is the end of crypto.' Republican Senator Ted Cruz called the plans a 'terrible idea'.
Instructions within the order directed the Treasury Department and other federal agencies to study the impact of cryptocurrency on financial stability and national security.
The action comes as lawmakers and administration officials are increasingly voicing concern that Russia may be using cryptocurrency to avoid the impact of sanctions imposed on its banks, oligarchs and oil industry due to the invasion of Ukraine.
A statement announcing the order did not mention Russia specifically, but suggested the action would 'help position the U.S. to keep playing a leading role in the innovation and governance of the digital assets ecosystem at home and abroad.'
'The approach outlined in the [order] will reinforce U.S. leadership in the global financial system and safeguard the long-term efficacy of critical national security tools like sanctions and anti-money laundering frameworks,' a statement by National Economic Council Director Brian Deese and National Security Advisor Jake Sullivan read.
'To these ends, the Order identifies the Administration's policy priorities, both for cryptocurrencies and any future U.S. central bank digital currency, to help guide the evolution of the digital asset ecosystem in a way that is consistent with our values.'
Two sources claim the executive order has been in the works long before the war in Ukraine, but the effects would be felt by the struggling Russian economy.
Both Republican and Democratic lawmakers are worried about cryptocurrency helping Russians not feel the pain of the sanctions, and some claim the risk warrants legislation.
President Joe Biden is preparing to sign an executive order this week that will, for the first time, regulate how cryptocurrency is traded as worries emerge Russia could use the digital currency to get around crippling sanctions imposed for invading Ukraine
Biden announced further sanctions on Russia Tuesday, saying the U.S. would target 'the main artery of Russia's economy' with a ban on energy imports from Moscow as Putin continues his assault on Ukraine. Pictured: Firefighters extinguish a fire of a damaged residential building after Russian shelling in the second largest Ukrainian city of Kharkiv on Monday, March 7
The Biden administration has however argued that Russia won't be able to make up for the loss of U.S. and European business by turning to cryptocurrency.
Meanwhile, Bitcoin and cryptocurrency advocates claim that Congress shouldn't overreact by over-regulating the industry.
It comes as Democratic Senator Elizabeth Warren of Massachusetts is drafting legislation that would make it harder to use cryptocurrency to evade sanctions, but would also regulate an industry that has not yet aced much scrutiny.
The proposal would threaten secondary sanctions on foreign crypto exchanges in order to force companies to choose between doing business in the U.S. or with sanctioned people and entities.
'Strong enforcement of sanctions compliance in the cryptocurrency industry is critical given that digital assets, which allow entities to bypass the traditional financial system, may increasingly be used as a tool for sanctions evasion,' Warren wrote in a letter also signed by Intelligence Committee Chairman Mark Warner of Virginia, Banking Committee Chairman Sherrod Brown of Ohio and Armed Services Committee Chairman Jack Reed of Rhode Island.
Republican Representative Warren Davidson of Ohio slammed the proposed legislation.
'Does @SenWarren understand that illicit activity accounts for around 1/1024th of total crypto transactions?' he questioned on Twitter Tuesday. 'Or that the giant sanctions loophole for Russian energy is Russia's biggest funding source?'
'Apparently not,' he quipped.
Davidson's tweet was a hit at Warren's heritage, after she, for years, used her Native American roots as an anecdote in political aspirations and on documents – like when applying for jobs.
A DNA test revealed Warren was actually only 1/1024th part Native American, forcing her to come out and apologize to the American aboriginal community for her claims, especially during the 2020 Democratic primary election.
Biden's executive action is expected to describe what government agencies, including the Treasury Department, need to do to develop policies and regulations on digital currencies.
The order is also expected to include a request for the State Department to ensure that American cryptocurrency laws are aligned with those of U.S. allies and will ask the Financial Stability Oversight Council, which monitors the stability of the U.S. financial system, to study illicit finance concerns.
Additionally, the order will explore the possibility of a new central bank digital currency. The Federal Reserve issued a paper on the topic in January that explores the risks and benefits of U.S.-backed digital currency.
Implicit in the order will be that cryptocurrency will remain a part of the U.S. economy for years to come. The White House's plans to move forward with the executive order were first reported by Bloomberg News.
While U.S. officials have played down the significance of cryptocurrency to Russia's ability to evade sanctions, it remains a concern.
'We will continue to look at how the sanctions work and evaluate whether or not there are liquid leakages and we have the possibility to address them. I often hear cryptocurrency mentioned and that is a channel to be watched,' Treasury Secretary Janet Yellen said last week.
Senator Elizabeth Warren is also drafting legislation that would increase regulation on cryptocurrency
Many anti-regulation Republicans may opposed the executive order and legislation directed at cryptocurrency trading. Ohio GOP Rep. Warren Davidson tweeted criticism of the moves, claiming only 1/1024th of crypto transactions are 'ilicit'
A senior administration official who spoke on condition of anonymity said the president's national security team has already been on the lookout for the use and creation of front companies and alternative financial institutions that Moscow might try to employ to get around sanctions.
Crypto is one of several spaces that the Biden administration is looking to shore up as it tries to make certain that sanctions on Russia have maximum impact. The official said past experiences in Iran and Venezuela with sanctions evasion are informing the administration's efforts. Additional export controls and new sanction targets are also expected to be unveiled in the days and weeks ahead to counter Russian sanction evasion efforts, the official said.
On Monday, Treasury's Financial Crimes Enforcement Network issued an alert advising financial institutions to be 'vigilant' against any efforts to evade sanctions in connection with Russia's war in Ukraine.
'Although we have not seen widespread evasion of our sanctions using methods such as cryptocurrency, prompt reporting of suspicious activity contributes to our national security and our efforts to support Ukraine and its people,' acting Director Him Das said in a statement.
The U.S. and many other NATO allies have already issued a slew of crippling sanctions against Russia, including halting the certification of the Nord Stream 2 Russia-to-Germany natural gas pipeline.
Biden announced further sanctions on Tuesday, saying the U.S. would target 'the main artery of Russia's economy' with a ban on energy imports from Moscow, while acknowledging the financial squeeze it would put on Americans already paying record-high prices at the pump.
'Americans have rallied support -- have rallied to support the Ukrainian people and made it clear we will not be part of subsidizing Putin's war,' the president said at the White House.
Biden said the U.S. blockade would 'deal another powerful blow to Putin's war machine' after a vast number of sanctions targeting Russia's financial institutions and top officials were already levied in coordination with other western governments.
He also admitted, however, that the new ban would impact American drivers as well as prices continue to skyrocket at the pump, dubbing it 'Putin's price hike.'
'The decision today is not without cost here at home. Putin's war is already hurting American families at the gas pump. Since Putin began his military buildup on Ukrainian borders, just since then, the price of the gas at the pump in America went up 75 cents,' Biden said.
'And with this action it's going to go up further. I'm going to do everything I can to minimize Putin's price hike here at home.'
Almost 100 Russian oligarchs and politicians have been sanctioned by the European Union or U.S. but not by Britain. Many have been buying property, paying for private schools and enjoying luxury lifestyles in the United Kingdom, a joint investigation by the Daily Mail and The Bureau of Investigative Journalism can reveal.
The Prime Minister has insisted that Britain is leading the way in imposing sanctions on wealthy Russians linked to Vladimir Putin's regime, but so far only 13 have been targeted since the invasion of Ukraine began.
It has sparked fears the UK is 'trailing its allies badly' after the EU announced a raft of sanctions on oligarchs with close ties to Britain last week. There are also concerns that delays could allow Putin's associates to dispose of their assets.
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2022-03-09 11:38:35Z
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