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Is the U.S. Keeping Up in the Digital Asset Space?

Terri Luttrell, CAMS-Audit, CFCS
April 18, 2022
Read Time: 0 min

Innovation is key in the world of decentralized currencies

The United States will have to be creative to stay competitive globally as digital assets enter the mainstream.

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Rapid Growth

The rise of digital assets

The innovative world of digital assets has made big strides since its inception in 2009. However, today it is still a relatively new market that does not have mainstream usage within the United States. The industry's most significant market increase was between 2016 and 2018. It experienced a downward correction from 2018 to 2019, sometimes referred to as the "crypto winter." For purposes of this article, digital assets are defined as a representation of value only available in electronic form. Cryptocurrencies are a subset of digital assets and are decentralized networks based on blockchain technology.

Bitcoin and other digital assets have remained volatile without regulation, with generally more risk-tolerant investors using cryptocurrencies as an alternative payment method. Even so, digital assets, including cryptocurrencies, have seen explosive growth in recent years, surpassing a $3 trillion market cap last November and up from $14 billion just five years prior. 

Executive Action

Concerns abroad spark U.S. interest in risk reduction

It seems the White House is taking notice. On March 9, President Biden signed the unprecedented Executive Order on Ensuring Responsible Development of Digital Assets, challenging the U.S. to continue being the world leader in the global financial system and innovative technology. According to a White House statement, the executive order's goals are to:


  • enhance consumer protection
  • ensure financial stability
  • increase national security
  • reduce climate risk


The White House describes the executive order as an attempt to balance innovation and U.S. leadership in the digital asset space while signaling an appetite to protect against various risks through additional regulation and legislation.

The timing of the executive order seems to coincide with recent concerns over the Russian invasion of Ukraine. The conflict brings to light two significant uses of digital assets with very different intentions. Although it is commonly known that there are many legitimate uses of digital assets, cyber-enabled fraudsters and other cyber threat actors have cast a dark cloud over the payment method. Although there is no sound evidence, the President and Congress have recently implied that Russian oligarchs and Russian companies are using cryptocurrencies to circumvent global sanctions. In addition, ransomware attacks have been traced back to Russian hackers who demanded payment in cryptocurrency, believing that they were acting anonymously and could not be tracked.

On the flip side, Ukraine is demonstrating that digital assets used legitimately have a powerful impact, and cryptocurrency is unmatched as a quick, secure payment method. Many non-governmental agencies worldwide are delivering real-time, cross-border humanitarian aid to Ukrainian nonprofits, immediately affecting the livelihood of the Ukrainian people. According to the Deputy Minister of Ukraine, Ukraine has raised nearly $100 million in direct aid from digital assets since opposing the Russian invasion. It is worth noting that illicit actors also flock heavily to these situations and use fraudulent techniques to gain funds, so any nonprofit giving should be scrutinized.

It is worth noting that illicit actors also flock heavily to these situations and use fraudulent techniques to gain funds, so any nonprofit giving should be scrutinized.

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U.S. Priorities

National objectives in cryptocurrency policy

In her recent remarks on digital assets, Secretary of the Treasury Janet L. Yellen summarized the executive order, addressing the digitalization of finance and highlighting that new technology has raised the possibility of reduced reliance on traditional financial institutions and credit card companies. Yellen further recapped the six policy objectives outlined in the executive order:

Protect consumers, investors, and businesses

As digital assets can pose a significant financial risk, sufficient oversight and standards must be in place. The executive order emphasizes that the U.S. should ensure that safeguards are in place and promote digital assets' responsible development. 

Safeguard financial stability from systemic risk

Some digital asset trading platforms and service providers have multiplied in size and complexity and may not be subject to or in compliance with appropriate regulations or supervision.  Digital asset-related companies should be subject to regulatory and supervisory standards that govern traditional financial markets, in line with the "same business, same risks, same rules" philosophy.  

Mitigate national security risks

Digital assets may pose significant illicit finance risks, including money laundering, cybercrime and ransomware, narcotics and human trafficking, and terrorism and proliferation financing – all warned against in FinCEN's national priorities. It is in the national interest to take action to mitigate these illicit finance and national security risks through regulation, oversight, and law enforcement action.

Promote U.S. leadership and economic competitiveness

The U.S. derives significant economic and national security benefits from the central role that the U. S. dollar and U.S. financial institutions and markets play in the global financial system. Continued leadership in the global financial system will sustain the nation’s financial power and promote its economic interests. This can be accomplished by establishing a framework to drive U.S. competitiveness and leadership in leveraging digital asset technologies.

Encourage equitable access to safe and affordable financial services

Many Americans are underbanked, and the costs of cross-border money transfers and payments are high. Affirming the critical need for safe, affordable, and accessible financial services as a U.S. national interest must inform our approach to digital asset innovation. Such secure access is essential for communities with insufficient access to financial services. 

Support responsible technological advances

The executive order stated that government intends to continue to support new technologies that protect human rights, consider privacy issues, and reduce climate change. The balance between responsible development of digital assets and the risks they present is crucial to the success of the next steps in the changing financial landscape.

What's Next

The future of digital currency

A critical measure within the executive order is the urgency placed on research and development of a potential U.S. Central Bank Digital Currency (CBDC). President Biden directed the U.S. government to assess the technological infrastructure and capacity needs for a U.S. CBDC in a manner that protects Americans' interests. Monetary authorities globally are also exploring and introducing CBDCs; a few ambitious countries such as China and South Korea have already piloted a demo version of the technology. The U.S. goal is to remain competitive as a world financial leader, and the tone of the executive order underscores that a U.S. CBDC may be an important strategy to that end. The Federal Reserve stated as part of a January 2022 research and analysis paper that it will only move forward with a CBDC if the benefits of a CBDC outweigh its risks, the concept has broad public support, and it has "clear support from the executive branch and Congress, ideally in the form of a specific authorizing law." It appears it will only be a matter of time, perhaps years, before stablecoin and CBCD are a part of the United States' financial future

Although generally not a fan of further regulation, the digital asset industry might view the executive order as a positive step toward mainstream usage and stability of this innovative payment method. The executive order is vital for all FinCrime professionals to understand. Users should be ready for further regulation of digital assets and more users jumping on the bandwagon. However slow the wheels may turn, this executive order marks the beginning of the U.S. buy-in to digital assets. Traditional financial institutions, be ready.

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About the Author

Terri Luttrell, CAMS-Audit, CFCS

Compliance and Engagement Director
Terri Luttrell is a seasoned AML professional and former director and AML/OFAC officer with over 20 years in the banking industry, working both in medium and large community and commercial banks ranging from $2 billion to $330 billion in asset size.

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About Abrigo

Abrigo enables U.S. financial institutions to support their communities through technology that fights financial crime, grows loans and deposits, and optimizes risk. Abrigo's platform centralizes the institution's data, creates a digital user experience, ensures compliance, and delivers efficiency for scale and profitable growth.

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