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U.S. Executive Order on Cryptocurrencies
Simon Erickson, 7Investing: “The biggest news right now that we really should be paying some attention to is Biden’s executive order that’s laying out their strategy for cryptocurrencies. We’ve heard some people call this a nothing burger, where it’s just a bunch of lip talk, and it wasn’t anything of interest. And then other people saying that, you know, actually, this is a great step for the US government to be embracing cryptocurrencies. What’s your take on the executive order at the 10,000 foot level?”
At the beginning of March, President Biden and the White House issued their executive order (EO) on cryptocurrencies, much to the anticipation of the industry. The overall takeaways from were that Biden and the federal government didn’t use this opportunity to brashly clamp down on crypto, but rather acknowledged the industry is here to stay and called on various government agencies to explore the pros, cons, and possibilities of digital assets. Additionally, the White House highlighted the growth of digital assets in just over a decade, including a survey that suggests 40 million Americans (~17% of Americans 18 years+) have used and/or traded digital assets and 100+ countries that are exploring or piloting CBDCs. The EO details a few focal areas:
- Consumer/ investor protection - Specifically scams, cyberattacks, and other illicit activities were mentioned
- Financial stability and mitigation of systemic risk - This, more than likely, is in reference to stablecoins and their growing role in the global economy.
- The leadership and global competitiveness of the U.S. in technology and in the global financial system
- Financial inclusion
- Responsible innovation and environmental impacts
Practically speaking, the EO orders multiple federal agencies to research the risks/benefits of cryptocurrencies and offer suggestions for new productive legislative changes in ~6-12 months.
While the outcomes of the reports are uncertain, many in the crypto industry welcome a unified approach to crypto regulations rather than the existing framework that has been fragmented and disorganized. Different regulatory bodies have laid claim to the crypto landscape over the years, making compliance a guessing a game for some. The Commodity Futures Trading Commission (CFTC) chairman recently stated “nearly 60% of cryptocurrencies are commodities” and that his team is positioned to lead regulations over the market. Meanwhile, SEC chairman Gary Gensler has continually commented that many cryptocurrencies, including stablecoins, are no different than securities and, as such, should fall under his sphere of influence in the name of “consumer protection.”
Despite the lack of concrete rulings, it’s encouraging that the EO read as a balanced and level-headed approach to crypto regulations, even at times referencing the potential benefits of digital assets. This is in stark contrast to the many negative sound bites and headlines often run by mainstream media, including this recent display from Senator Warren. It suggests that the Biden Administration recognizes the importance of crypto now and for the future of America.
