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President Joe Biden will sign an executive order as soon as midweek to marshal resources across the government to develop a broad plan to oversee cryptocurrencies, including whether the United States should issue a fully virtual version of the dollar. 

The United States has lagged behind some foreign governments in developing a regulatory framework for digital asset markets, which have grown to more than $1.7 trillion in recent years due to lightning-fast growth. 

The long-awaited directive will direct federal agencies to conduct a series of studies over the next nine months. Biden will direct federal agencies to work together to assess the viability of a so-called central bank digital currency issued by the Federal Reserve.

The introduction of a digital dollar would have far-reaching implications for global payment systems, domestic commerce, and the banking industry. 

While Biden’s order does not constitute policy direction, it is an important step toward providing clarity for an industry that has already disrupted traditional banking and payment systems. Nonetheless, many in the industry may object, arguing that the whole point of cryptocurrency is to avoid government control. 

The document is expected to spark a new wave of lobbying from the banking and commercial sectors, not to mention the well-funded crypto firms that have been establishing a presence in Washington over the last year.

The document also requests that the Financial Stability Oversight Council, a panel chaired by Treasury Secretary Janet Yellen and comprised of various independent regulators, investigate the impact of digital assets on financial stability. In addition, agencies will be asked to investigate what steps might be required to reduce the use of cryptocurrency for illicit finance. 

In January, the Fed launched a public consultation on whether it should issue a digital dollar, which would function similarly to physical cash by allowing a person or business to transfer money directly to another person or business without using a private bank account.

The Boston regional Fed branch also released preliminary research into how a central bank digital currency might work technologically, concluding that such a project was feasible. 

The order mandates a central bank digital currency study, which will include input from the Treasury Department, Justice Department, Commerce Department, Department of Homeland Security, Office of Management and Budget, and the Director of National Intelligence. 

The Attorney General’s office will also investigate whether new legislation is needed for a digital dollar, while the Office of Science and Technology Policy will look into technical requirements.

A study on the environmental impact of digital assets will be conducted by the Environmental Protection Agency and the Office of Science and Technology Policy. The State Department will be tasked with figuring out how to collaborate with international authorities on crypto policy.