Biden Executive Order is ‘Watershed’ for Digital Assets
Market participants have welcomed an executive order from U.S. President Joe Biden as a watershed moment for blockchain and digital assets.
The President signed the order on March 9.
Ryan Louvar, chief legal officer and head of business and legal affairs, digital assets at exchange-traded fund sponsor WisdomTree Asset Management, told Markets Media that the order was very positive as the US government has recognised that digital assets and blockchain are a significant portion of the global economy.
Louvar said: “It is important that the order specifies inter-agency and global co-operation.”
He continued that the order prepares the groundwork for more regulatory clarity which will spur innovation, especially as it sets deadlines of between six months and a year for regulatory agencies to perform assessments.
WisdomTree has applied to the Securities and Exchange Commission for a spot bitcoin ETF. The US regulator has approved bitcoin futures ETFs but not spot ETFs, although they have been approved by other jurisdictions.
Louvar added there are still hurdles to a spot bitcoin ETF and the firm is working with the SEC to overcome their objections, especially as WisdomTree has launched spot crypto ETPs outside the US which work well and provide investor protection.
“The executive order asks US agencies to carry out research and assessments and our hope is that, as a result, spot bitcoin ETFs will move forward,” he added.
In addition, many institutional investors are waiting for regulatory clarity before becoming active in digital assets.
“We hope the order will be positive for increasing institutional participation, innovation and financial inclusion,” Louvar added. “It is hard to underestimate the benefits of blockchain in increasing transparency and access, especially for the underbanked population.”
The firm has been working with regulators to launch WisdomTree Prime, a direct-to-client distribution channel for digital assets.
The Global Blockchain Business Council said: “After nearly a decade of building, evolving, and scaling, the executive order is a major step for the industry in receiving official recognition from the highest level of government in the U.S.”
The Blockchain Association, said in a statement it has long called for a clear, unambiguous, and pro-innovation approach to federal policy for the growing crypto industry.
Jake Chervinsky, head of policy at the Blockchain Association:
Jeremy Allaire, co-founder, chairman and chief executive of Circle Internet Financial, the sole issuer of stablecoin USD Coin (USDC):
Jerald David, president of Arca Labs at the digital asset fund manager, said in an email that the order strikes a good balance between an appreciation of the opportunities that come with blockchain technology while understanding the need to reduce risks.
“The EO should catalyze greater focus, prioritization, communication, and coordination across federal agencies and internationally,” he added.
However, he noted there is no discussion on what is a security and that DeFi, or “decentralized financial ecosystems” and “peer-to-peer payment activity” are only mentioned once, in the context of illicit finance.
“While the EO is sparse on details, the signaling is constructive.,” said David. “The details will come with the various reports and proposals to come. The deadlines message that it is now a good time to engage with regulators and agencies on related policy issues.”
Rostin Behnam, chair of the Commodity Futures Trading Commission said in a statement that the order was a significant step:
“The EO will ensure greater cooperation and coordination between various cabinet-level agencies, the independent market regulators and prudential regulatory bodies,” Benham added. “President Biden is right to emphasize the need for increased customer education and consumer protection, while combating illicit activity and safeguarding financial stability.”
Mark Wetjen, the former CFTC Commissioner who is head of policy and regulatory strategy at crypto exchange FTX US:
Sheila Warren, chief executive of the Crypto Council for Innovation (CCI):
Gary Gensler, chair of the Securities and Exchange Commission:
Hany Rashwan, chief executive and co-founder of Swiss crypto exchange-traded products issuer 21Shares, said in a statement that the order is a significant step for US investors.
“We are optimistic about what doors the actions will open for 21Shares in the US,” Rashwan added. “The action will help the US establish itself as a leader in crypto for years to come and 21Shares is proud to play a small part in that.”
Dennis Kelleher, president and chief executive of Better Markets, a non-profit that promotes the public interest in financial markets:
“Robust, independent and data-driven analysis of the claimed benefits of digital assets is imperative and, if indeed there are any, they must be carefully weighed and balanced against consumer protection and financial stability concerns,” added Kelleher. “That’s what President Biden’s executive order promises and why we welcome it: a government-wide assessment of the risks and benefits, if any, of digital assets, especially cryptocurrencies, and the development of a comprehensive and effective regulatory framework.”
Nigel Green, chief executive of deVere Group, an independent UK financial advisory group, said in a statement that history will judge the executive order to instruct departments across Washington to study digital currencies as a landmark moment. The order includes the investigation of a potential US central bank digital currency.
“The Federal Reserve’s potential new currency would have many advantages, including convenience and speed of payments, but what it would not have is privacy,” Green added. “Indeed, a digital dollar would serve to give U.S. authorities even greater oversight of citizens’ transactions.”