Why the Biden Administrations Report is a Shoulder Shrug Event

Earlier today the Biden Administration finally released the rest of the report that was due after he signed the March 9th Executive Order. When it broke I noticed I was tagged several times in the thread about it with some people commenting on what I had previously written about. Since I do work on The Hill and have been involved with numerous briefings and events the biggest thing that I have tried to bring to the community here is an insight into what is going on in D.C. in Congress about this industry that we all care about.

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There are numerous ways to frame this report and while some try to paint it in an actionable plan others are discussing how it really is nothing but a nothing burger. Like all things, the truth lies somewhat in the middle but I want to address the big ones and explain the big takeaways findings. If there is something you have a question about please comment it below and to the best of my ability I will try to provide an answer. Before I jump in though I do what to state that this is not the final report. Most sections/reports were due last week or 180 days after the signing of the EO but there are still 4 sections of the EO that are not due for an additional 30 days.

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Breaking down the Executive Order can be done in a few different ways from the 9 different reports issued, the 6 priorities laid out, or what impact this actually has. That being said the 6 priorities that were to be addressed were consumer and investor protection, financial stability, illicit finance, U.S. leadership in the global financial system and economic competitiveness, financial inclusion, and responsible innovation. When I see this list what I see are really two categories. The first is about the person and the second is about the U.S. standing itself.

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What the report heavily focuses on is something that I think most people would admit is important to some extent and that is protecting investors/users from malicious actions. It is already in this first issue we hit the main issue that this entire report runs into. The Administration does not create or pass laws that job is left to Congress. To make a point of saying that they are doing something the various government agencies do state or list new or expanded steps they plan to take and that is why we see the words "redoubling" a lot. See these agencies can say they want to do something or try and expand and do something else but they again run into the Congress issue. Congress is the one that sets the budget and pays for these agencies to exist so they might have these crazy hopes and dreams but it does not mean that they will be getting the money to do so. There will be some things that they can clean up rather easily like the blatant scams that get promoted and honestly it does not involve too much money or resources for them to address but again they only have some much money and they already have submitted their budgets months ago for next year. Interestingly enough not a ton is discussed about inclusion and I personally feel it is because it is known that crypto is much more inclusive than traditional finance is. Not saying it still cannot improve but it has shown the ability to perform much better.

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The U.S. leadership sections really break down to one thing and one thing only. Does the U.S. need a central bank digital currency (CBDC)? I have to admit the report has left me a little bamboozled as in the EO the Federal Reserve, an entity already doing an enormous amount of work on this, was not included in requests for reports, and instead, the Admin went to the Treasury Department. Well, this led to an answer that shocking does not mean much as the Treasury will now be doing research into this topic ignoring the years of research that the Federal Reserve, the central bank of the U.S., has already done. The general response from the report was not in support of it as it did not call out that we needed to develop one. Since FedNow is getting ready to roll out instant payment without the typical 3-5 business day window will become possible and over time I would assume standard. This report though has now set up the Fed and Treasury to end up clashing in the future as the idea is further pursued and who would be in charge of it or in charge of what parts.

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It is expected that the Admin will now work on legislation to present to Congress to have them act upon but there is a huge issue with that. Congress is in session for the next two weeks followed by a month off. We then have elections and a lame-duck Congress and this makes it highly unlikely that any significant legislation is passed as they typically do not. The report really highlighted the shortcomings of the way things are set up and showed that the Admin can only do so much without Congressional approval and passed legislation. Some of this passed legislation is destined to clash with these reports and set up agency and executive branch infighting over who gets what piece of the pie.