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President Biden has produced an Executive Order on Digital Assets, in particular Cryptocurrency. Find out the details in this blog!
The President of the United States recently issued an Executive Order on all Digital Assets. It comes off the back of years of hazy regulation in regards to cryptocurrency and stablecoins. The time has now come for the financial establishment to take the disrupting industry seriously. This blog will provide an overview of the contents of the Executive Order, and ultimately what we can expect going forward.
For the last decade, cryptocurrency has been a growing thorn in the side of the US Federal Government. I speak for many people that believe the financial establishment truly underestimated the power of decentralised finance and self-sovereignty. In addition, what started with Bitcoin in 2008, led to a plethora of new cryptos building on the blockchain. As a result, industry market capitalization surmounted over $3 Trillion. Therefore, President Biden has decided to get a handle on it.
Most importantly, the overarching aim of the executive order is to gain greater oversight of the cryptocurrency industry. Further, due to it being largely unregulated, most of the innovators in the growing space find themselves hesitant to be in the US for fear of being shut down. Without doubt, this is something the executive order wants to address. Similarly, it will be clamping down on the dark side of crypto whereby nefarious activity, unfortunately, does exist. Consequently, there are 5 aspects of the executive order that Biden believes will “address the risk and harness the potential benefits” of cryptocurrencies. So, the 5 steps are:
Firstly, I’d say the main takeout is a positive one and that’s the acknowledgment that crypto is not only here to stay but that it can work in tandem with the US government by supporting innovation. On the other hand, the executive order reconfirmed the likelihood of the US moving towards a CBDC backed by the dollar. Moreover, the popularity of a looming CBDC divides opinion as it follows the same fundamental issues as fiat. For instance, high inflation, currency debasement, and not to mention privacy concern. Meanwhile, with this executive order, federal agencies will be reviewing the current regulations in place. Ultimately, this will likely see the current format of stablecoins (crypto pegged by the dollar) ceasing to exist.
Secondly, an important aspect to consider is how the Federal Government reacts to studying Bitcoin mining and the environmental impacts of digital assets in general. Bitcoin remains an easy target when it comes to the environment due to the processing power required for the Bitcoin network to function. Despite the Bitcoin Mining Council’s best efforts claiming Bitcoin is over 50% renewable, the federal government will be closely monitoring Bitcoin’s carbon footprint. Furthermore, there will be a huge desire to make Bitcoin ESG (Environmental, Social, Corporate Governance) compliant.
In conclusion, this executive order is very much a precursor to further research and consideration of the future of cryptocurrency. Additionally, only time will tell if the US makes good of the opportunity they have of working in corroboration with many of the leading innovators of emerging financial technology. However, overall, regulation should be encouraged because clarity will only entice more people into the space. In summary, this will speed up renewable energy whilst slowing down illegal activity at the same time.
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