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Crypto Executive Order Seeks To Develop a Federal Regulatory Framework for Digital Assets

President Joe Biden’s Executive Order on Ensuring Responsible Development of Digital Assets sets forth an unprecedented federal framework for evaluating cryptocurrency regulation in the United States. The order’s objectives include protecting consumers from financial and cybersecurity risks while promoting affordable and inclusive financial services, preventing illicit financing and national security threats while promoting privacy and security, and reinforcing U.S. leadership in technology and economic competitiveness. To accomplish these goals, research and development efforts into a U.S. CBDC (Central Bank Digital Currency) are of “the highest urgency,” including the actions necessary to launch a CBDC and participating in international pilot projects. CBDCs are cryptocurrencies denominated in national units of account (such as U.S. Dollars), which are direct liabilities of a central bank (such as the U.S. Federal Reserve). The Treasury, Commerce Department, and other agencies must provide a report on U.S. CBDC design within six months of the order. The FTC, SEC, and federal banking agencies will include their analysis of what drives mass adoption of digital assets and the risks and opportunities of such growth, along with proposed regulatory and legislative actions to protect consumers while supporting expanded access to financial services. Technology heads of state must provide a technical plan for creating and maintaining a U.S. CBDC.

Citing concerns of money-laundering, cybercrime, corruption, and terrorist financing, various security agencies are tasked with analyzing the illicit financing risks of all cryptocurrencies and developing an action plan to address the role of law enforcement and how to increase financial services providers’ compliance with AML/CFT controls. A framework will be established for engaging with foreign partners on such compliance and global standards for digital asset transactions. The Treasury and Commerce Department are also tasked with reviewing how crypto can enhance U.S. economic competitiveness in the global economy.

Notably, the Executive Order did not hint at any specific positions being taken by the Administration, nor did it announce any new regulations. The Order generally appears to have been well-received by many crypto executives, including FTX’s Sam Bankman-Fried, who called the approach reasonable and constructive, noting that the federal government has been under pressure to provide greater regulatory clarity.

© 2022 ArentFox Schiff LLPNational Law Review, Volume XII, Number 70
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About this Author

James Williams Crypto Attorney ArentFox Schiff Los Angeles
Partner

James practices at the intersection of corporate and intellectual property law, often structuring and negotiating leading-edge deals in the fashion, sports, and entertainment worlds. Having completed extended tours of duty as a global brand CEO and a private equity operator, he brings a heightened understanding of the strategic, financial, and operational issues that underpin his deals.

James chairs the firm’s Crypto practice and routinely counsels fashion brands, professional sports teams, athletes, and media companies on leading-edge deals...

213-443-7617
Gus N. Paras Attorney Automotive Group ArentFox Schiff Los Angeles
Attorney

Gus is an Attorney in the Automotive group, which has been recognized by Chambers USA as one of the best in the country.

Gus counsels automobile dealers on litigation and transactional matters including mergers and acquisitions, corporate formation and reorganization, legal compliance, franchise agreements and obligations, and real estate transactions. He has also negotiated dealership loan and security agreements with commercial lenders and represented dealers in franchise disputes before the New Motor Vehicle Board.

213-443-7648
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