US President Joe Biden is expected to sign an executive order on cryptocurrency this week, marking the first step toward regulating the digital currency.
The move comes as administration officials have raised concerns about Russia’s use of cryptocurrency to evade sanctions issued in response to its invasion of Ukraine.
Two people familiar with the process told the Associated Press the executive order on cryptocurrency was expected to be issued this week. It had been in the works long before the war, but the war makes it more urgent.
Biden’s cryptocurrency regulation executive order
The order is expected to describe what government agencies, including the Treasury Department, need to do in order to develop policies and regulations on digital currencies. Expected in the order is a request for the State Department to ensure American cryptocurrency laws are aligned with those of US allies. It will also ask the Financial Stability Oversight Council, which monitors the stability of the US financial system, to study illicit finance concerns.
In another move, the order will explore the possibility of a new central bank digital currency. In January, the Federal Reserve issued a paper on the topic that explores the risks and benefits of a US-backed digital currency.
Implicit in the order will be that cryptocurrency will remain a part of the US economy for years to come.
Russian connection to Biden’s cryptocurrency order
While US officials have brushed off concerns that cryptocurrency allows Russia to evade sanctions, it remains a concern for them.
“We will continue to look at how the sanctions work and evaluate whether or not there are liquid leakages and we have the possibility to address them,” Treasury Secretary Janet Yellen said last week. “I often hear cryptocurrency mentioned and that is a channel to be watched.”
A senior administration official, who also spoke on condition of anonymity, told the AP the president’s national security team has already been on the lookout for the use and creation of Russian front companies and alternative financial institutions to get around sanctions.
Cryptocurrency is one of several spaces that the Biden administration is looking at, as it tries to make certain that sanctions on Russia have maximum impact. The official said past experiences in Iran and Venezuela with sanctions evasion are informing the administration’s efforts, and additional export controls and new sanction targets are also expected to be unveiled in the days and weeks ahead to counter Russian sanction evasion.
On Monday, Treasury’s Financial Crimes Enforcement Network issued an alert advising financial institutions to be “vigilant” against any efforts to evade sanctions in connection with Russia’s war in Ukraine.
“Although we have not seen widespread evasion of our sanctions using methods such as cryptocurrency, prompt reporting of suspicious activity contributes to our national security and our efforts to support Ukraine and its people,” FinCEN acting director Him Das said in a statement.