A representation of cryptocurrency Bitcoin is seen in this illustration taken August 6, 2021.
A representation of cryptocurrency Bitcoin is seen in this illustration taken August 6, 2021. Reuters / DADO RUVIC

Bitcoin surged on Wednesday after President Joe Biden signed an executive order that requires U.S. government agencies to assess benefits and risks of creating a central bank digital dollar and other cryptocurrency issues.

The executive order potentially expands the adoption of virtual currencies in the U.S. financial system.

Biden's order will require the Treasury Department, the Commerce Department and other key agencies to prepare reports on "the future of money" and the role cryptocurrencies will play.

"The market has clearly been heartened by talk of supporting responsible innovation and a constructive approach to regulating the evolving digital token economy," Bitfinex Trading team said in a note.

The White House last year said it was considering wide-ranging oversight of the cryptocurrency market - including an executive order - to deal with the growing threat of ransomware and other cyber crime.

Bitcoin rose 9% to $42,260, on track for its biggest gain since Feb. 28, while smaller peer ether, the coin linked to the Ethereum blockchain network, added 6.2% to $2,737, also set for its best day this month.

"We don't want to see too many regulations too fast - we want regulations but we want a steady hand doing it. The SEC (U.S. Securities and Exchange Commission) will be the leader in my opinion on (global) regulations," said Ed Hindi, chief investment officer at Switzerland-based Tyr Capital Partners.

U.S. exchange traded funds (ETFs) tracking bitcoin futures that gained regulatory approval late last year also jumped. ProShares Bitcoin Strategy ETF and Valkyrie Bitcoin Strategy ETF surged 9.6% and 9.7%, respectively, in early trading.

U.S. crypto miners that act as a proxy for moves in digital coins also advanced. Riot Blockchain soared 10.6% and Marathon Digital Holdings surged 11.3%, while crypto exchange Coinbase Global Inc added 8.2%.