President Joe Biden is expected to sign an executive order on cryptocurrency this week that will mark the first step toward regulating the way digital currency is traded.
The move comes as administration officials have raised concerns in recent weeks about Russia's use of cryptocurrency to evade the impact of crushing sanctions in response to its invasion of Ukraine. The sanctions have sent the ruble to record lows and shut down the country's stock market.
Two people familiar with the process said that the executive order on cryptocurrency was expected to be issued this week and that much work had been in progress before the war. Both people spoke on condition of anonymity to advance the order.
The order is expected to outline what government agencies, including the Treasury Department, must do to develop policies and regulations on digital currencies. It is expected to include a request for the State Department to ensure that US cryptocurrency laws are aligned with those of US allies and to ask the Financial Stability Oversight Council – which monitors the stability of the US financial system United States – to study the problems of illicit financing.
Additionally, the order will explore the possibility of a new central bank digital currency. The Federal Reserve published a paper on the subject in January that explores the risks and benefits of the US-backed digital currency.
The order will imply that the cryptocurrency will continue to be part of the US economy for years to come. The White House's plans to go ahead with the executive order were first reported by Bloomberg News.
Although US officials have downplayed cryptocurrency in Russia's ability to evade sanctions, it remains a concern.
“We will continue to look at how the sanctions work and assess whether or not there are liquid leaks and we have the possibility to address them. I often hear mention of cryptocurrencies and that is a channel to watch,” Treasury Secretary Janet said last week. Yellen.
A senior administration official who spoke on condition of anonymity said the president's national security team has already been on the lookout for the use and creation of front companies and alternative financial institutions that Moscow could try to employ to circumvent sanctions.
Crypto is one of several spaces the Biden administration is looking to consolidate as it tries to ensure sanctions on Russia have maximum impact.
The official said past experiences in Iran and Venezuela with sanctions evasion are informing the administration's efforts. Additional export controls and new sanctions targets to counter Russian sanctions evasion efforts are also expected to be unveiled in the coming days and weeks, the official said.
On Monday, the Treasury Financial Crimes Enforcement Network issued an alert advising financial institutions to be “vigilant” for any attempt to evade sanctions related to 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,” Acting Director Him Das said in a statement.