U.S. President Joe Biden’s executive order is an important next step in the government’s journey into regulating crypto.
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Some crypto enthusiasts were underwhelmed with the President’s executive order, claiming that it lacked clarity and detail in the order itself. Others believe that it didn’t go far enough to directly legalize cryptocurrencies.
Biden’s decision: Praised, generally speaking
But in large, from what I have heard and seen, most people in the industry, including myself personally, welcomed the White House’s approach to regulate crypto in a comprehensive way. And most importantly, it brings me relief that the U.S. will not be (or at least doesn’t appear to be) interested in broadly cracking down on the industry.
There is quite some difference between the former president and the current president. Donald Trump said years ago that he wasn’t a fan of Bitcoin. Biden signed an executive order that asked government agencies to create rules that would allow regulators to monitor the industry. This places the U.S. in a leadership position within the digital asset market.
From a helicopter view, President Biden’s executive order makes it clear that the U.S. must lead the digital asset industry. This is while also governing the growth of the industry in a safe manner.
A White House fact sheet announcing the directive said: “The United States must maintain technological leadership in this rapidly growing space, supporting innovation while mitigating the risks for consumers, businesses, the broader financial system and the climate. And it must play a leading role in international engagement and global governance of digital assets consistent with democratic values and U.S. global competitiveness.”
The message I take from President Biden’s order is that the federal government sees cryptocurrency as a serious, legitimate, and game-changing industry. It can shape the way we make payments, do our finance, and other areas in our digital lives.
But the devil lies in the details. Let’s look at which each department is likely to do based on President Biden’s executive order.
Biden’s order: Protecting the U.S. economy
The Financial Stability Oversight Council (FSOC) is a government organization that studies the U.S. financial system. It will investigate the potential threats that cryptocurrencies, especially stable coins, could have on the U.S. economy. The FSOC has recently said that it has concerns over the adoption of stable coins and crypto. But it also said that “The development of digital assets and the use of associated distributed ledger technology may present the opportunity to promote innovation and further modernization of financial infrastructure. Regulatory attention and coordination are critically important in light of the quickly evolving market for digital assets.”
This means that the FSOC wants fair and sustainable regulations for stable coins and other cryptos, simply to ensure that the economy and users are safe.
Combat fraud in crypto
According to Biden’s executive order, the Secretary of the Treasury, and the Department of Homeland Security will come up with a national strategy to combat crimes facilitated through cryptocurrency.
The good news is that most cryptocurrency exchanges already have strict KYC and AML procedures in place. This is along with having technology in place to detect any suspicious transactions. If regulators do enforce these rules, compliant and sound crypto exchanges are mostly already prepared to comply.
Crypto can help grow the U.S. economy
Through Biden’s executive order, we can see that the White House believes that the development of cryptocurrency may do some good for the country’s economy.
The president’s executive order has ordered the Commerce Department to figure out how the crypto and blockchain industry can boost U.S. competitiveness in the global economy.
It also instructs other areas of the government to find ways to kick off crypto innovation across the country. The Biden administration went as far as exploring the value of creating a government-backed stable coin, or what we call, Central Bank Digital Currencies (CBDC). China has already launched one, called the digital yuan.
Biden signed an executive order that shows a desire to create a sustainable and innovative cryptocurrency industry. But it is still too early to say if the government will fully embrace and develop crypto. This is despite the fact that Americans want bitcoin from their banks. We don’t know exactly what these new rules will look like from every government department. The good thing is that Biden appears to be taking a middle-of-the-road approach and clearly sees some value in embracing crypto for the country.
Regardless, the U.S. government is aware that crypto is here to stay and that Americans want to be part of this digital revolution. And Biden appears to be listening.
About the author:
Raymond Hsu is the CEO and co-founder of Cabital, a leading cryptocurrency wealth management platform. Cabital’s mission is to help empower people from all walks of life to generate high-yield passive income from their digital assets and create a more sustainable financial industry. Prior to co-founding Cabital in 2020, Raymond worked for fintech and traditional banking institutions, including Citibank, Standard Chartered Bank, eBay, and Airwallex.
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