Reflections on President Biden’s Executive Order and Responsible Innovation

Reflections on President Biden’s Executive Order and Responsible Innovation

Last week, the Biden Administration issued its Executive Order on “Ensuring Responsible Development of Digital Assets,” (see also the accompanying Fact Sheet and previously-embargoed Background Press Call with Senior Administration Officials) along with various statements from the relevant Executive Branch and independent agencies. While we want to share our thoughts, we won’t do another summary/TLDR/highlights of it, given that there are so many very good ones out there, including this excellent one from TRM Labs.

This is a good moment and a welcome one. We appreciate that the White House–and its team of experts who helped craft this over several months–took the time to piece together a thoughtful and measured statement. It identifies possible risks in terms of consumer and investor protection; illicit finance and other risks to U.S. national security; financial stability and integrity; and climate change, among others. But equally, the Order notes the potential promise of these technologies to further financial inclusion; to minimize friction in cross-border transactions; to foster innovation; and to protect privacy.

It’s also a recognition that digital assets and the ecosystems built around them are no longer minuscule. With 40 million American adults who have used, purchased, or traded crypto, it is no longer niche. That acknowledgment alone is dramatic.

It’s critical to stress what this Executive Order does not do: it does not impose an explicit moratorium on enforcement actions, new guidance, or new rulemakings, even during the periods of study required by the order. It does not promulgate a certain rule, or set of rules. It offers neither an indictment nor an endorsement of any particular technology or industry. And it does not provide hardwired clarity on how the government intends to address the potential risks.

But it does offer a roadmap, or the beginnings of a roadmap, towards this much-needed clarity. With its “whole of government” approach, the Order instructs the relevant U.S. agencies to come together and coordinate thinking, and–crucially–to open their doors and minds to all stakeholders. It sees this ecosystem as real, and as here to stay. It notes that the U.S. “must play a leading role in international engagement and global governance of digital assets consistent with democratic values and U.S. global competitiveness.” By stressing “responsible financial innovation,” it echoes and affirms what many of us in the industry have called for: clear, practical, and understandable rules; a level playing field; focusing on addressing real risks; flexible approaches; and fostering, rather than hindering, financial and technological innovation.

And it’s also an opportunity and an invitation. In outlining the risks and challenges of cryptocurrencies and other digital assets, the Order notes that the regulatory approach to date has had “inconsistent controls to defend against certain key risks,” and therefore suggests that addressing them will require “an evolution and alignment” of the government’s regulatory approach. The Executive Order invites stakeholders, including industry, advocates, academics, and international partners in this effort.

We’ve known and said from day one that for this ecosystem to thrive, it has to be safe and responsible. It has to exist and operate in a way that markets aren’t manipulated, and that fraud is addressed, and that illicit finance, including money laundering, sanctions evasion, and other national security risks don’t get a foothold.

We’re here to meaningfully engage with regulators, law enforcement, and policymakers to help design those rules and address their concerns. This Executive Order is thoughtful and open, and we and other members of the crypto/web3/blockchain community must respond with similar openness and giving heed to the adjective in the phrase “responsible innovation”.

That means that we seriously address those risks; we don’t demonize skeptics or accuse them of being corrupt, or being “haters” that “just don’t get it”; we won’t comment on their age, or physical appearance or “memeify” our detractors. While we should call out possible inconsistencies and hypocrisies, we’ll refrain from “whataboutism” as a means of deflection from real criticism. Disagreements, even forceful ones–and perhaps especially the forceful ones–will be respectful and productive. There’s too much at stake here to do otherwise. We’re building the future of digital assets, and we want to help foster a sustainable community. To do that, we’re going to need to engage with the government to build that future together.

We’re thrilled to join in this conversation.

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