President Joe Biden signed an executive order Wednesday on innovation in digital assets. The order outlines a “whole-of-government” approach to addressing the risks and harnessing the potential benefits of digital assets and their underlying technology.

Digital assets, including cryptocurrencies surpassed a $3 trillion market cap last November, and surveys suggest around 16% of adult Americans – approximately 40 million people – have invested in, traded, or used cryptocurrencies, according to the White House.

Specifically, the Executive Order:

• Directs the Department of the Treasury and other agency partners to assess and develop policy recommendations to address the implications of the growing digital asset sector and changes in financial markets for consumers, investors, businesses, and equitable economic growth.
• Encourages the Financial Stability Oversight Council to identify and mitigate economy-wide financial risks posed by digital assets and to develop appropriate policy recommendations to address any regulatory gaps.
• Directs the Department of Commerce to work across the federal government in establishing a framework to drive U.S. competitiveness and leadership in and leveraging of digital asset technologies.
• Affirms the critical need for safe, affordable, and accessible financial services as a U.S. national interest that must inform our approach to digital asset innovation, including disparate impact risk.
• Directs the federal government to take concrete steps to study and support technological advances in the responsible development, design, and implementation of digital asset systems while prioritizing privacy, security, combating illicit exploitation, and reducing negative climate impacts.
• Places urgency on research and development of a potential U.S. Central Bank Digital Currency, should issuance be deemed in the national interest. The Order also encourages the Federal Reserve to continue its research, development, and assessment efforts for a U.S. CBDC, including development of a plan for broader U.S. Government action.