Biden’s Executive Order on Crypto
Since the start of the Biden administration, cryptocurrencies have been a popular talking point, since state officials and the US treasury have been calling for more regulations to be imposed on the volatile digital assets.
After the government’s decision to heavily tax all cryptocurrencies, President Biden has just announced a new executive order that is going to change our outlook on cryptocurrencies forever. What does this order entail and how is it going to affect the cryptocurrency markets in general? Let’s take a look.
Biden signs an executive order
On March 9, President Biden signed an executive order that will direct the federal government to create new solutions in order to regulate cryptocurrencies, due to the possibility of destabilizing traditional finance methods in the country and the rest of the world.
This is a huge blow for the digital asset markets since cryptocurrencies by creation were designed to be destabilized and free of government intervention. But, the last few years have made the government more and more concerned, due to the rising rate of money flowing into the digital assets community.
The order was reportedly been issued for the past few months, and the long-awaited directive is putting the crypt0 industry on edge.
In a statement, Brian Deese — the director of the National Economic Council and Jake Sullivan — the President’s national security adviser, said that this decision was taken in the best interests of the public. “This will help position the U.S to keep playing a leading role in the innovation and governance of the digital assets ecosystem at home and abroad, in a way that protects consumers, is consistent with our democratic values and advances U.S global competitiveness”.
Central Bank digital currencies
The report also calls on the government to assess the possibility of adopting a central digital currency, which has been rumoured for almost a year. In countries including China and Sweden, the idea of a central digital currency is gaining popularity, so the Federal Reserve is expected to make big decisions in the coming year to ensure they do not fall behind the competition.
https://twitter.com/federalreserve/status/1501633226565165066?s=20&t=bb4_GrBmTIFBzMKBAmLaCA
Following the announcement, the official Twitter account of the U.S federal reserve shared its thoughts on the rumoured central digital currency initiative.
https://twitter.com/federalreserve/status/1501633229362716685?s=20&t=bb4_GrBmTIFBzMKBAmLaCA
https://twitter.com/federalreserve/status/1501633231518683142?s=20&t=bb4_GrBmTIFBzMKBAmLaCA
Addressing the matter, the tweet read –
“While the fed has made no decisions on whether to pursue or implement a central bank digital currency, or CBDC, we have been exploring the potential benefits and risks of CBDCs from a variety of angles, including through technological research and experimentation”.
The head of the Federal Reserve, Jerome Powell has even shared his bullishness on having a central digital currency since it would eradicate the need for stablecoins such as USDT. The digital coins on the other hand will maintain value since they will be backed by stable financial assets like bank reserves and short-term debts.
Mitigating illicit financial activities
The report which came through on a white house fact sheet also stated that one of the main reasons for this executive order was to mitigate more financial activities.
Regulators and policymakers have been arguing about the risk factor that has been increasing among stablecoins themselves. Tether, the largest stablecoin in the world is also not considered risk-averse, since it is not sufficiently backed by dollars in the reserve.
Other than this, the President specified the need to mitigate illicit finance and national security risks, that have been caused by various cryptocurrencies. Last month alone, the U.S government has seized $3.6 billion worth of Bitcoin, which was the biggest seizure since 2016.
Targeting Crypto exchanges
The backdrop is already starting to be felt in the cryptocurrency communities. The U.S government have currently begun targeting the large cryptocurrency exchanges, that work as brokerages to facilitate the transactions of these digital assets. In 2022, crypto start-up BlockFi was fined $50 million by the SEC (Securities and exchange commission) after they were rumoured to have violated securities laws with their retail lending products.
The biggest cryptocurrency exchange in the USA, Coinbase ran into trouble as well with the SEC. They were hit with legal action, over a product that was considered similar to Blockfi’s, which was offering the users interest payments on all of their cryptocurrency assets and holdings. A settlement was made, which required Coinbase to completely drop this new service idea.
Russian conflict
The current timing of the executive order is not a surprise, due to the heavy economic sanctions that the U.S and the rest of the world have been imposing on Russia. Higher cryptocurrency sanctions including a call to ban all cryptocurrency exchanges and assets in Russia has been requested.
Currently, the exchanges have the right to make this decision, but the government making heavier sanctions is going to make life even harder for the companies, and we may see them give in to the wishes of the U.S government and the federal reserve.
When the regulations are tightened, we can expect some pull-back from the current rise in digital asset prices. This is why we request everyone to invest sensibly and consult their financial advisors before making any hasty decisions.
