Much of the executive order does focus on assessing and mitigating risks, whether that’s money laundering risks, terrorist financing risk or financial stability risk.
“The second part of the [executive order], after it outlines all the policy objectives that the president had … that's where there were some very specific concrete actions that were directed or requested, like the request for the Financial Stability Oversight Council to assess the financial stability risks that are present in the space in the future of money reports,” House said.
The administration has willingly called for more public information in answering questions about cryptocurrencies’ role in illicit finance, the same area the executive order actually began. The department’s brief request-for-comment filing asks a number of questions.
Intriguingly, the analysis of risks goes all the way down to the personal. Part of the order directs an analysis on the potential of crypto to address financial inclusion concerns.
“[The order] recognizes that our assessment of the risks and potential benefits of digital assets must include an understanding of how our financial system does and does not meet the current needs of consumers in a manner that is equitable, inclusive and efficient,” a White House official said in March. “[Our] antiquated payment infrastructures [is] leaving the United States and its consumers with options that are slow, costly or altogether inaccessible, as is particularly true of cross border payments. That is why this executive order directs a report on the future of money and payments.”
This would seem to support the U.S.’ current research into central bank digital currencies and, in particular, whether the Fed should issue a digital dollar. The idea remains controversial, with CBDC opponents just generally disliking the concept of the U.S. central bank getting involved, and others skeptical that a token-based digital currency like what has been suggested would be able to meet the needs of this ambitious goal.
But to this end, one of the reports “tried to assess, from a very holistic picture, what the future of money looks like,” House said.
Noting the expansiveness of the executive order, House pointed to concerns over climate risks (on which the White House Office of Science and Technology Policy published a report earlier this year) as an example of one of the wide range of issues addressed.
The order didn’t only look at companies, it looked at broader ecological issues, namely climate change.
“Every policy objective, which outlined a lot of different discrete issues like we had, we pointed to climate risks, which is a huge priority for the administration,” House said.
Mind you, things are different now than they were when this order was drafted and published. Crypto’s 2022 has been marked by failures, bankruptcies and millions of dollars worth of crypto likely lost by investors. The collapses have run the gamut of issues regulators are paying attention to, ranging from stablecoins to lenders to exchanges.
Regulators are already evaluating whether existing or new laws would prevent the next Terra or Celsius. The scope of the issues crypto has seen this year should demonstrate the need for transparent communication about the industry, House said.
This ranges from decentralized finance (DeFi) to more centralized projects.
“A lot of this was foreseeable, and it's extremely unfortunate so many people have been hurt in these circumstances,” House said. “But ultimately, … there are the things that some members of the sector don't want to hear, which is that there has to be more effective regulation, in some cases, enforcement in other cases, and just implementation and compliance in others.”