Executive Order 14067: Considerations for Leveling the Digital Assets Playing Field
Technology Policy Brief #65 | By: Steve Piazza | August 29, 2022
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On March 9 of this year, President Biden issued Executive Order 14067 “Ensuring Responsible Development of Digital Assets.” Its impetus is a directive for governmental departments and agencies to examine the government’s role regarding the centralization of digital assets, specifically those pertaining to financial transactions.
Digital assets refer to anything representing value that is exchanged as payment, investment, or any other type of digital transaction using distributed ledger technology (DLT), or decentralized database of transactions. This includes cryptocurrencies, securities, and other financial instruments. Non fungible assets (NFTs), like digital recordings and images, will require additional attention at another time.
The directive calls for analyses that involve safeguarding digital assets, establishing a central bank digital currency (CBDC), and assuring that the United States remains a leader in the global financial system.
The comprehensive Executive Order requires coordinated research to be performed and communicated by year’s end. Specified entities are to report on the impact of CBDCs and other digital assets on financial and technological infrastructures, end users, law enforcement, and climate.
The need for and value of government involvement regarding digital assets is made clear enough in the language of the Executive Order. For that, it has been generally well received, from the financial world to the crypto community.
Those who are concerned specifically about all end users should also be somewhat encouraged.
Though the Executive Order offers no clarity beyond the terms “consumers, investors, and businesses,” it does make reference to promoting “the ability to exercise human rights; financial inclusion and equity,” and considers that “the rise in use of digital assets, and differences across communities, may also present disparate financial risk to less informed market participants or exacerbate inequities.”
To be fair, the advantages of investing and trading in digital assets are already well known and do apply to all users regardless of socioeconomic status. Anyone with a device such as a smart phone or computer is eligible for an account. And by design, the accounts are already extremely secure for all users because the unique network spreads out encrypted user information from one device or computer to the next forming the blockchain (a DLT utilizing a permanent cryptographic signature known as a hash).
In fact, the developing world has started reaping the benefits of digital assets. These include the speed at which critical financial aid can go right into a digital wallet additionally secured by ID biometrics, as well as the ease of migrant workers sharing money with family back in home countries. Little or no transaction fees allow for more capital access which is beneficial especially in countries where capital flow is limited.
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The disadvantages, it must be said, are also common knowledge, and they are significant enough to cause usage barriers. Some exchanges charge fees and even have different rules, and tax implications can be confusing. Sometimes blockchain and cryptocurrency platforms are difficult for some to manage, as some people just have difficulty moving from paper to digital. In remote areas in the U.S., and especially in developing countries, access to broadband might be limited.
Those less optimistic about any lack of end user specificity in the Executive Order will have to rely on the promise of its intent and settle for now on use of words like “inclusion,” “inequity,” and “disparate.” Certainly, any administration, and some more than others, would not want to assume it is their place to tell industry the exact processes they need to employ to deal with their customers. But all administrations cannot ignore the concept of regulation and must find the most appropriate means to do so one way or another. The Biden Administration has chosen theirs.
Time will tell what impact the Executive Order and the resulting reporting might have. Since it’s been released, some reporting has been completed and even several legislative measures have been introduced in the House and Senate.
At most, the Executive Order signals in broad strokes the Biden Administration’s stance on the future of digital assets. It might not state particulars enough for some critics, but it does recognize that since the technology is still rapidly evolving and the platforms can be quite volatile, the government needs to play a role.
An action merely calling for ideas might not seem like action, but it’s a start.
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Learn more about The Harvard Business Review’s support for universal access to CBDC networks and governmental support for regulatory standards by clicking here: https://hbr.org/2020/08/could-digital-currencies-make-being-poor-less-costly
Here is an example of one of the governmental agency reports, this one submitted by Attorney General Merrick Garland on internationally coordinated efforts of law enforcement regarding digital assets: https://www.justice.gov/ag/page/file/1510931/download
This is one of the proposed bipartisan bills to, amongst other things, protect the interests of consumers: