The White House’s plan for digital asset regulation is here, and while the injunction doesn’t say much, cryptocurrency proponents consider it a win. Perhaps that was inevitable, after much Twitter FUD (investor-speak for fear) about what the order would entail. The actual textwhile it’s a bit vague, it’s still positive for the industry – not least because it gives everyone some time.
His approach sidelines the most persistent cryptocurrency skeptics
There have been a few last minute attempts to regulate cryptocurrency. For example, there was the time when the Trump administration’s Financial Crimes Enforcement Network tried to push through new proposed regulations over Christmas. (This was shelved.) There were also the proposed tax changes to last year’s infrastructure law. (They passed.)
“I am very excited that there will be an opportunity to participate in discussions to keep the US a leader in this space,” said Kristin Smith, executive director of the Blockchain Association, an industry group. (Trump-era FINCEN’s proposal ruined her Christmas that year.) There aren’t many surprises in the EO — the list of issues is the one that lawmakers and industry insiders have already discussed.
There is another reason for the crypto community to celebrate: the injunction legitimizes digital assets by treating them as worthy of regulation. The approach sidelines the most persistent skeptics of cryptocurrency and leaves people who think crypto is planet-destroying nonsense – and there are many of those people! – with some friends in DC to represent their point of view.
The order instructs agencies to develop policies that will protect consumers, investors and businesses, as well as guard against systemic risk. The Biden injunction specifically tells agencies to find ways to minimize the risks of illicit use of cryptocurrency. But it is also instructing the Department of Commerce to figure out how to keep the US competitive in developing digital assets.
“When serious officials look sober at crypto, the response is not to set their hair on fire.”
“People were worried that it would only focus on the risks,” said Blake Estes, a partner at Alston & Bird, which focuses on fintech. “Hopefully it gives more serious people the comfort that they can step into the space and do serious projects and not be regulated out of their existence.”
The US government has examined all of these regulations and the executive order is not a clear roadmap. But the emphasis on innovation in the text of the injunction – and ensuring the “responsible development” of digital assets – suggests a crackdown on cryptocurrency is unlikely. The response from cryptocurrency enthusiasts has highlighted that.
“Digital assets have huge potential economic and social benefits for countries that adopt sensible regulations,” wrote Faryar Shirzad, the chief policy officer at Coinbase, on Twitter. He wants the public to be involved in the process of regulating cryptocurrency, saying it’s “essential” to get input from people who’ve been thinking about it for years. “This is a hopeful moment.”
“The EO is just further confirmation that when serious officials look sober at crypto, the response is not to set their hair on fire,” wrote Jerry Brito, executive director of Coin Center, a DC crypto think tank, on Twitter. Instead, the EO emphasizes that the US wants to remain competitive, promote innovation and minimize damage.
“The subtext there, as I read it, is that we have to do this to be leaders.”
“The recognition by the White House and the Biden administration that this sector warrants a government-wide approach to simultaneously seize opportunities while managing and managing the inherent risks of responsible innovation is encouraging,” wrote Dante Disparte, Circle chief strategy officer. , the company behind a dollar-pegged stablecoin called USDC, in a blog post†
The order too promotes central bank digital currency (CBDC), which can also mean a digital dollar. “Sovereign money is at the heart of a well-functioning financial system, macroeconomic stabilization policies and economic growth,” the order says. For this reason, researching, developing and exploring the deployment of a CBDC is of the “highest urgency”. That could lead to faster and cheaper payments across national borders — which is why the order calls for a report from agencies, including the State Department and Homeland Security, to assess the future of money and payment systems. The Federal Reserve released its own, rather ambivalent, report on CBDCs earlier this year.
The order suggests the US should develop a CBDC to keep the dollar as the world’s reserve currency, notes Alan Konevsky, head of legal and business affairs at tZERO, a crypto trading system. “The subtext there, as I read it, is that we have to do this to be leaders,” Konevsky says.
While Konevsky generally finds the warrant’s tone “not necessarily friendly,” he also thinks the warrant’s existence is an acknowledgment of both how important and mainstream digital assets have become. If the US needs to build a CBDC to stay competitive, that might be the validation the cryptocurrency community needs that their technology is important.