Update, 3.9.22: President Biden did indeed sign the executive order this morning, including all of the rumored provisions.
After many years of ignoring the swiftly burgeoning cryptocurrency market, the federal government seems ready to finally put in place a general crypto strategy. President Biden is getting ready to sign an executive order that lays out a general foundation for cryptocurrency regulation and oversight. He could sign it as soon as this week.
The creation of an overall crypto strategy for the U.S. will no doubt affect investors’ outlook on popular cryptocurrencies like bitcoin and ethereum. Many are drawn to cryptocurrency specifically because, unlike fiat currencies, it is not regulated by the U.S. federal government at all.
But others stay away from crypto for the very same reason. Cryptocurrency exchanges, loans, and “banks” aren’t overseen by the agencies that ensure the American dollar, for example, isn’t abused by those entrusted to hold large sums of it.
The contents of Biden’s plans are still something of a mystery, though a few details are known. What we do know for sure is that, following Biden’s executive order, crypto will never be the same in the U.S.
A rough sketch of what’s to come — As is often the case with executive orders, the public has pretty much been left in the dark about the Biden administration’s plans leading up to the order’s signing. A few select details have been slipped under the table to Reuters, though.
The order’s main purpose is essentially to set a deadline for various agencies and government bodies to report their own findings on the future of crypto. That includes looking to the Justice Department as to whether or not the U.S. should create a new national currency. A few other agencies — like the SEC, the FTC, and the Treasury — to study crypto’s customer impact.
“We could see a significant shift in policy in 180 days,” a source said. “This is a likely step toward creation of a central bank digital currency.”
The same sources say other reports will be set out by the executive order as well, including one studying the environmental impact of crypto. The impact of cryptocurrency on competitiveness, as well as the technical infrastructure needed to implement a nation crypto market, will also be studied.
RIP crypto? — Many will read about Biden’s order and mourn the total death of the crypto market. And, to be fair, there is some truth in this evaluation — though the death will not be all-consuming unless the White House outright bans crypto in the U.S.
Most of this death will be in the less-savory ways crypto is used in its current, unregulated form. Take, for example, the “romance scammers” that made $547 million last year through the cryptocurrency market; regulation would ostensibly curb scammers, making crypto generally safer for the public. An oversight agency could potentially offer protections for crypto transactions, too.
But the federal government’s regulations will need to be well-implemented to actually curb these crypto woes without hurting crypto-holders. Cryptocurrency exchange rates are incredibly volatile; one wrong word from a person in power and the market can come crashing down. The very idea of regulation will send some fleeing from the market — which will indeed affect market prices.
Cryptocurrency is also unique in that it isn’t tied to a single country in the way fiat currency is; any regulations imposed by the U.S. will ripple across the global market. The U.S. will need to find a fine balance between risk and protection if it hopes to keep the market intact.