Since the outset of 2022, there has been increasing buzz about the feasibility of creating and regulating a digital currency tied to the U.S. dollar and officially managed by the federal government. In response to the extreme and controversial popularity of NFTs, cryptocurrency, and other digital goods, President Biden released an executive order titled “Ensuring Responsible Development of Digital Assets” in early March.
On September 16, the Biden administration finally issued its much-awaited follow-up to the executive order: a framework with a robust delineation of how such digital assets are to be managed and regulated by the U.S. government. While the framework presents a wide array of implications for the fintech world, perhaps most notable is the document’s recommendation for the creation of a so-called digital dollar.
“A U.S. CBDC – a digital form of the U.S. dollar – has the potential to offer significant benefits,” the administration wrote in a fact sheet about the framework. In addition to advancing more inclusive financial outcomes and fostering the growth of the digital economy, a digital dollar “could enable a payment system that is more efficient, provides a foundation for further technological innovation, facilitates faster cross-border transactions, and is environmentally sustainable.”