by Raymond Hsu of Cabital
US President Joe Biden’s executive order is an important next step in the government’s journey into regulating crypto.
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 in directly legalizing cryptocurrencies.
In general, the crypto community praised Biden’s decision. 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 US will not, or at least doesn’t appear, to be interested in broadly cracking down on the industry.
I find it amazing that we went from Donald Trump, who once said years ago that he wasn’t a fan of Bitcoin, to a president who signed an executive order that asked government agencies to create rules that would allow regulators to monitor the industry while placing the US in a leadership position within the digital asset market.
From a helicopter view, President Biden’s executive order makes it clear that the US must lead the digital asset industry while also govern the growth of the industry in a safe manner:
“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,” a White House fact sheet announcing the directive said.
The message I take from President Biden’s order is that the federal government sees cryptocurrency as a serious, legitimate, and game changing industry that 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.
Protecting the US economy
The Financial Stability Oversight Council (FSOC), a government organisation that studies the US financial system, will investigate the potential threats that cryptocurrencies, especially stable coins, could have on the US economy. Although the FSOC has recently said that it has concerns over the adoption of stable coins and crypto, 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 modernisation 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, along with having technology in place to detect any suspicious transactions. This means that if regulators do enforce these rules, compliant and sound crypto exchanges are mostly already prepared to comply.
Crypto can help grow the US economy
Through Biden’s Executive Order, we can see the White House believes that the development of cryptocurrency may do some good for the country’s economy.
The Executive Order has ordered the Commerce Department to figure out how the crypto and blockchain industry can boost the US 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.
Despite Biden signing an executive order that appears that it wants to create a sustainable and innovative cryptocurrency industry, it is still too early to say if the government will fully embrace and develop crypto, despite the fact that Americans want Bitcoin from their banks, since 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 US 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.