Biden administration to study whether US should issue a cryptocurrency

Can Russia use crypto to dodge Western sanctions?

FOX Business’ Kelly O’Grady reports on whether officials with major crypto exchanges she spoke with will block Russian users. 

President Biden signed an executive order Wednesday directing agencies within his administration to study whether the U.S. central bank should create a digital currency.

The order directed relevant departments and agencies within the Biden administration to study the legal and economic ramifications of creating a cryptocurrency and established the "first-ever comprehensive digital assets strategy for the United States."

BITCOIN PRICE RISES AS BIDEN TO SIGN EXECUTIVE ORDER ON CRYPTO STRATEGY

According to White House National Economic Council Director Brian Deese and White House National Security Adviser Jake Sullivan, an "American approach" to digital assets is one that "encourages innovation but mitigates the risks to consumers, investors, and businesses, broader financial stability, and the environment."

Bitcoins  (REUTERS/Edgar Su / Reuters Photos)

"We are clear-eyed that the ‘financial innovation’ of the past has too often not benefited working families, while exacerbating inequality and increasing systemic financial risk," they said, adding that there is a "need to build robust consumer and economic protections into digital asset development." 

The order is set to examine the effect of cryptocurrencies on national security, including on tools like sanctions that are being levied against Russia. Lawmakers and administration officials are increasingly voicing concern that Russia may be using cryptocurrency to avoid the impact of sanctions imposed on its banks, oligarchs and energy industry due to its invasion of Ukraine.

President Biden speaks in Fort Worth, Texas, Tuesday, March 8, 2022.  (AP Photo/Patrick Semansky / AP Newsroom)

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An official, though, said the administration "will continue to aggressively combat the misuse of cryptocurrency, including the use of it, to evade U.S. sanctions," noting that its stance applies to the Russia-Ukraine crisis, as it does to "any other nation or regime or non-state actor that seeks to undermine U.S. national security."

The use of cryptocurrency is not a "viable workaround to the set of of financial sanctions we've imposed across the entire Russian economy and in particular to its central bank," the official added.

U.S. Treasury Secretary Janet Yellen speaks during a news conference, after attending the G7 finance ministers meeting, at Winfield House in London, Britain June 5, 2021.  (Justin Tallis/Pool via REUTERS / Reuters Photos)

A senior administration official said the order was also launched as part of the U.S. strategy to counter ransomware.

Officials also stressed that the president’s executive order had been in the works for months – before Russia launched its multifront war on Ukraine on Feb. 24.

Meanwhile, Treasury Secretary Janet Yellen on Wednesday touted the president’s order, saying this approach will "support responsible innovation that could result in substantial benefits for the nation, consumers and businesses," and will address "risks related to illicit finance" and prevent "threats" to the U.S. financial system and economy.

BIDEN TO SIGN EXECUTIVE ORDER TO OUTLINE US CRYPTOCURRENCY STRATEGY

Under the executive order, the Treasury Department will partner with other agencies to produce a report on the future of money and payment systems, and will convene the Financial Stability Oversight Council to evaluate potential financial stability risks of digital assets.

"And because the questions raised by digital assets often have important cross-border dimensions, we’ll work with our international partners to promote robust standards and a level playing field," Yellen said.

Yellen noted that the Treasury Department has already been studying one particular kind of digital asset – "stable coins."

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"As we take on this important work, we’ll be guided by consumer and investor protection groups, market participants, and other leading experts," Yellen said. "Treasury will work to promote a fairer, more inclusive, and more efficient financial system, while building on our ongoing work to counter illicit finance, and prevent risks to financial stability and national security."

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The Federal Reserve in January issued a paper that said a digital currency "would best serve the needs" of the country through a model in which banks or payment firms create accounts or digital wallets.

FOX Business' Ken Martin and The Associated Press contributed to this report. 

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