President Joe Biden signed an executive order on Wednesday that urges the Federal Reserve to examine the risks and benefits of creating a digital currency.
The executive order focuses on how cryptocurrency could protect consumers, how it affects financial stability, illicit activity, competitiveness with other world economies and responsible innovation.
The order also calls on the Treasury Department to develop policy recommendations regarding cryptocurrency. On Tuesday, the Treasury Department said its financial literacy arm would work to develop consumer-friendly materials to help people “make informed choices about digital assets.”
Back in January, the Federal Reserve issued a paper discussing the potential risks and benefits of a digital currency.
It noted the central bank “would need to strike an appropriate balance” when protecting consumers’ privacy, something that has been the main focus since cryptocurrencies started.
It added that a digital currency “would best serve the needs” of the country through a model in which banks or payment firms create accounts or digital wallets.
The executive order comes as lawmakers and administration officials are increasingly voicing concern that Russia may be using cryptocurrency to avoid the impact of sanctions imposed on its banks, after its invasion of Ukraine.