CED Newsletters & Policy Alerts

Action: Executive Order “Strengthening American Leadership in Digital Financial Technology” 

What it does: The Order establishes a working group of Federal agencies to recommend federal changes to support the growth of digital assets (e.g., cryptocurrencies and blockchains). This includes evaluating the feasibility of a national digital asset stockpile. It also prohibits agencies from undertaking any work related to the development of a central bank digital currency (CBDC) and revokes the Biden Administration’s Executive Order 14067 “Ensuring Responsible Development of Digital Assets.” Additionally, the Order expresses the Administration’s intent to protect access to banking services for all law-abiding citizens and firms. 

Key Insights: 

• As CED has previously noted, the digital assets market has grown rapidly, but the current regulatory framework is limited and deeply fragmented. Firms have expressed frustration that the lack of clear regulations stifles innovation and results in regulation by enforcement. 

• The Order is consistent with previous indications that the Administration would take a lighter approach to enforcement than the Biden administration and would support legislative efforts to establish a clearer regulatory framework.  

• In 2022, the Federal Reserve stated that, as central bank money, a “CBDC would be the safest digital asset available to the general public, with no associated credit or liquidity risk.” However, the Fed also noted that a CBDC could compete with bank deposits and potentially threaten financial stability during times of stress.  

• The Order’s provisions blocking the development of a CBDC and rescinding the previous Administration’s actions on digital assets have little practical effect since the Federal Reserve has long indicated that it would not issue a CBDC without a directive from Congress, and the work directed by the Biden Administration’s Order has been completed. 

• The Order’s statement regarding access to banking services responds to concerns that some financial institutions have closed accounts for reasons alleged to be politically motivated. However, the provision does not direct any specific actions to be taken.