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What the Biden Executive Order Has in Store for Crypto

If you’ve been paying attention 👀, you know crypto is pretty mainstream these days. It’s been enjoying dramatic growth and gaining in financial power 💸, and guess who’s interested now? The White House 🏛. In March 2022, President Joe Biden endorsed an executive order involving crypto asset companies for the protection of consumers and responsible innovation. This has digital money aficionados wondering what the Biden executive order has in store for crypto as a whole. 

So what does this mean for the rest of us who are involved in crypto financial infrastructure, like aspiring crypto miners or investors? Well, let’s take a look 🤓 at why administration officials are taking an interest in digital currencies and what this crypto and competition policy may mean for crypto markets.

Why Federal Agencies are Interested in Crypto

Need a primer on crypto? Check out our general article on cryptocurrency before you read on!

As we mentioned at the outset of this article, the market for the digital version of cold hard cash 💵 has grown immensely into billions of dollars, with the United States being one of the key players in it. Additionally, the U.S. is overtaking other nations in the industry in terms of technological innovation, market development, and trade. Experts say this is partial because of recent strict regulatory regulations (such as the prohibition of crypto asset mining) on technological infrastructure implemented in nations like China and Russia.

The fact that the cryptocurrency industry has no central bank or authority has a ton of advantages, but it also has some drawbacks. For example, this digital asset trading platform 📲 exposes users/investors to:

  • Significant price volatility and illicit financing risks in the blockchain ledger
  • Potential illicit exploitation by powerful blockholders due to inadequate protections

There are also negative climate impacts from the huge energy expenditure associated with mining (though that’s changing). So, what we’re trying to say is financial stability isn’t at all guaranteed when it comes to the cryptocurrency market. There aren’t many consumer protection measures 🔒 or supervisory standards in decentralized networks just yet, and crypto mining is also hurting our planet 🌎. 

What’s in Biden’s Executive Order for Crypto?

The federal government approach here is to ask government law enforcement agencies to set up committees and do a broad review of cryptocurrencies for informational purposes. They hope this will provide the government with a wide range of regulatory framework ideas 🧠 for crypto-asset markets.

What’s the end goal here? Informed decisions about the responsible development of payment innovation. This includes issues like managing sanctions evasion and money laundering 💰 similar to what the government does for more traditional financial institutions and financial services. 

For example, the Office of Science 🌌 and Technology Policy and the Environmental Protection Agency are tasked with researching the substantial implications of digital assets on the climate (natural or environmental assets) with the overall aim of reducing negative environmental impacts. After all, liabilities for greenhouse gas are only going up these days. 

The Goal of the Crypto Executive Order

Basically, the US government’s strategic plan for the digital asset space is twofold here:

  1. Reduce the aforementioned risks through additional measures
  2. Hang onto that leading position and the advantages of this quickly expanding sector

The initial regulatory approach for digital asset exchanges will concentrate on planning. Regulatory agencies will work on outlining fundamental principles to safeguard consumers and investor protection from illicit activities and aid in cybercriminal activities 🚫. They may also try to enable businesses to create cutting-edge financial platforms for digital asset services and digital asset transactions through legislative proposals. 

The feds hope these regulations, national policies, consumer protections 💪, and equitable access should help lessen some of the setbacks of digital asset innovation. It seeks to control excessive pricing volatility, climate risk, illicit finance risks of customer assets, and systemic risk to digital asset issuers. 

Is there any Advantage to Government Crypto Regulation?

At the moment, cryptocurrency is barely controlled (no market protection measures), and the role of law enforcement in this space is basically nonexistent. While this is considered a financial innovation in some ways, there are some financial stability risks with no oversight in the crypto space. Because decentralized financial networks are a key component 🔑 of digital asset markets, though, many crypto investors are concerned that regulation by domestic or foreign governments could have potential risks for consumers.

Ironically, at the moment, the federal action plans may be contributing to one of the very issues they’re trying to solve. Market instability is one of the main blockchain architecture issues holding the digital asset ecosystem back from being fully accepted as a mainstream financial technology. However, uncertainty over the timing and manner of executive action or legislative actions involving crypto can actually make these swings worse for now.

That being said, in the long run, relevant agencies might make crypto safer 😍. Government agencies taking coordinated action to lower the risk of crimes, provide some market stability, and exert legal authority to push more eco-friendly financial activity could help crypto. 

Can Decentralized Markets and Executive Orders Be Friends?

There’s no denying that new financial assets without any rules can generate financial risks to consumers. With large market disruptions and economic downturns, monetary authorities can’t help but take notice 🧐.

The presidential order has a lot of potential implications. It outlines crypto policy recommendations and international standards that could reduce market-related and national security risks 🔒. Even for those who turn up their noses at mitigating risks through regulation, the presidential order in a way recognizes the significance of Bitcoin markets, digital wallets, and related industries. It shows that blockchain technology’s leading role in economic growth is noteworthy;  in fact, the government even plans to enter digital financial markets by creating a digital form of currency in the future. 

We’ve come a long way from cryptocurrency mining in the far reaches of the web. Now, many businesses have implemented a game plan for crypto in payment systems, and the sector continues to bask in lightning-fast growth. That’s why it’s best to be a part of the people familiar with the benefits of cryptocurrency and the future of money as a whole 🤑. Join Ian Corzine’s newsletter today to stay updated on everything crypto!