President Joe Biden signed an executive order on Wednesday directing agencies to coordinate their efforts to gauge the benefits and risks of cryptocurrencies.
The new order is the broadest attempt yet to regulate a rapidly growing industry and protect consumers, investors and the American economy from pitfalls in a market.
According to a White House fact sheet, digital assets have exploded in popularity in recent years and have surpassed $3 trillion in value in November. Roughly 40 million people in the US have invested in, traded or usedCryptocurrencies.
The Commerce and Treasury Departments will be instructed by the order to coordinate the federal approach to regulating digital assets, according to the White House.
Brian Deese, director of Biden's National Economic Council, told CNBC Wednesday morning that they need a comprehensive, all-of-government framework to address the emerging risks and opportunities that digital assets pose.
The financial innovation and technological innovation underlying this boom has a lot of potential benefit, but the risks and the costs are becoming apparent.
The dollar value of the world's most popular cryptocurrencies jumped more than 9% on Wednesday to around $42,300.
The SEC, Commodity Futures Trading Commission and the Financial Stability Oversight Council have spent years trying to bootstrap existing legal frameworks to monitor the novel markets for bitcoin, Ethereum and thousands of other token and assets.
Half-measures are insufficient to oversee the advent of what is becoming one of the world's largest markets and position the U.S. as a leader in the space.
Biden's executive order is a "watershed moment" for the industry according to the president of the exchange.
It paves the way for thoughtful national regulation that will allow builders to build in the US and ensure that the US remains a leader in the field.
It is important for various agencies to work together.
There is more than one person in that thinking.
In an interview, a partner at the law firm said that agencies have been reluctant to act as enforcers. He said that gathering various regulators, lawmakers and industry representatives in one room to develop a regulatory framework is an important step.
This asset class isn't going away. There are a lot of competing interests, and it has grown very big.
You can go to the SEC and the CFTC. The issue is that this asset class doesn't fit into any of our existing securities or regulatory frameworks.
Many on Wall Street are waiting for more input from Congress in 2022, according to the attorney who represented VanEck.
Cynthia Lummis wants to fill the legislative void around digital assets.
The Wyoming Republican has been drafting a massive bill for months that is expected to answer fundamental, but still-unanswered questions about how digital assets will be regulated in the U.S.
Those familiar with the bill's design say it could include guidance on what constitutes a digital security.
SEC chief Gensler told lawmakers in September that they don't have enough investor protection in the space.
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