US President Joe Biden announced that his administration is preparing an executive order, as cryptocurrencies are deemed a matter of national security.\
Biden administration looking to regulate crypto
Cryptocurrency investors saw this one coming, although the timing and sudden announcement still surprised many. According to sources at Bloomberg, the Biden administration is looking to consolidate the US Government’s strategy on cryptocurrencies and is planning to release an executive order as early as next February.
The order is said to task federal agencies with a SWOT (strengths, weaknesses, opportunities, threats) analysis of cryptocurrencies, including national security challenges. It would also include the possible systemic impact of crypto assets on legacy financial systems and the illicit use of cryptocurrencies. The White House expects final reports from the agencies by the latter half of 2022. Furthermore, the State Department and the Commerce Department are set to receive authority over regulating crypto.
The US’ position on crypto
None of this should come as a surprise, especially considering the US Congress held a hearing a few weeks ago, where several crypto bigwigs and exchange CEOs were asked to outline the benefits and threats of crypto to the country’s economy.
However, the United States has taken a somewhat ambiguous position in terms of cryptocurrency regulation. Some US mayors have been happy to accept salaries in crypto. Miami mayor Francis Suarez has even actively promoted the use of Miami Coin, a cryptocurrency that gives the city’s residents an opportunity to earn yield in Bitcoin. Particularly Republican lawmakers have been eager to embrace crypto as a “bastion of freedom,” with some like Ted Cruz coming out as unexpected allies of crypto proponents for favourable cryptocurrency regulation.
On the other hand, the deployment of a CBDC is still a topic that does not seem to be completely off the table in the States. Although the administration has not yet taken a firm position on the issue, the Federal Reserve is said to be considering a central bank digital currency. A recently released preliminary paper by the Fed opens the subject to public debate until May 20. However, the Fed is not planning to implement any specific measures without the backing of the White House.
Considering other countries have been eager to experiment with the use cases and feasibility of a CBDC, an outright refusal to adopt it by the Fed would be deemed a surprise. Particularly Democratic lawmakers have been eager to voice their concerns about the widespread adoption of cryptocurrencies, which they regard as a dangerous expansion of libertarian economic ideas.
What would US regulation do to the price of Bitcoin?
With the entire crypto market currently on knife’s edge, the announcement surprisingly did not trigger yet another selloff. Although the US is highly unlikely to go near a ban on crypto or propose regulation that would seriously impede access to cryptocurrencies (like controlling the flow of capital from and to the crypto ecosystem), it would not take much to scare an already jittery market even more. However, crypto investors should be prepared for another leg down if the executive order takes measures to implement stringent regulation.
