Technology is constantly changing, and sometimes it is difficult to keep up with all of these futuristic alterations. One big technology that has gripped Texas—and the nation—is digital currency and assets. Because more and more people are getting involved in digital currency, the federal government has started to regulate and mitigate the risks of digital assets and their underlying technology. These pieces of legislation and regulations may be confusing to individuals just learning about cryptocurrency. Because of this, explanations to common questions about digital assets and their legislation are below.
What Are Digital Assets?
While the terms “digital asset” and “digital currency” have become more popular over the years, many individuals are still unsure of what these terms mean. Digital currencies are a form of digital money or monetary value. Similarly, a digital asset refers to financial assets that are issued or represented in a digital form through the use of a technology ledger. A digital currency, therefore, can be a form of a digital asset, along with cryptocurrencies, securities, derivatives, and other financial products. Digital assets can be exchanged across digital asset trading platforms. Digital assets have grown exponentially over the past few years: by November 2021, non-state issues digital assets reached a combined market capitalization of $3 trillion.
What Are Some Recent Laws Impacting Digital Assets?
One regulation that impacts digital assets was an Executive Order—entitled Ensuring Responsible Development of Digital Assets—recently signed by President Biden. The goal of this Executive Order is to create a national policy for digital assets by addressing the risks of cryptocurrency while also encouraging Americans to take advantage of its potential benefits. The Order directs various areas of the federal government, including the Justice Department, the Department of Treasury, and the Federal Reserve System among others, to study the legal and economic implications of creating a U.S. central bank digital currency. This would be a form of digital money with a national unit that has direct ties to a central bank.