The Biden White House has officially unveiled its first-ever regulatory framework for cryptocurrencies in the United States.
The framework explains how the financial services sector should change to facilitate borderless transactions and how to combat fraud in the digital asset market.
The new regulations come in response to an executive order signed by President Joe Biden in March, which urged government departments to investigate the advantages and disadvantages of cryptocurrencies and publish formal reports on their findings.
Earlier, President Joe Biden called on government agencies to investigate the advantages and disadvantages of cryptocurrencies and publish public reports on their findings in an executive order released in March.
Government agencies have been working to create their own frameworks and policy recommendations for the past six months to address the half-dozen priorities listed in the executive order – including financial inclusion, responsible innovation, countering illicit finance, promoting financial stability, and protecting consumers and investors.
These suggestions make up the first “whole-of-government approach” to business regulation.
Possible Creation of an American CBDC?
The announced framework also suggests that a digital version of the dollar, known as CBDC, issued by the U.S. central bank may have “substantial benefits.”
A digital version of the dollar would be the central bank digital currency (CBDC) of the United States.
Although the U.S. has not yet made a decision about the issuance of a CBDC, it has been carefully evaluating the choices and implications of doing so.
There may be several advantages if the U.S. implemented a CBDC, including enabling effective and affordable transactions, promoting broader access to the financial system, stimulating economic development, and supporting the U.S.’s ongoing prominence within the global financial system.
A U.S. CBDC, however, might also bring about a number of problems since it could have an impact on everything from the security of sensitive data to the soundness of the financial system.
Current U.S. Digital Currencies
There are several varieties of digital US dollars available right now.
Under a system known as fractional-reserve banking, electronic U.S. dollars that are partially backed by reserves are kept in commercial bank accounts all throughout the nation. The bank retains a portion of its deposit liabilities in reserves, as the term suggests. This type of money may be moved between banks or between nations using the established financial infrastructure.
Also — a number of stablecoins, including Tether and USD Coin, are tied to the US dollar.
