By Evan Spicer
In March 2022, U.S. President Biden issued an executive order entitled “Ensuring Responsible Development of Digital Assets.” In spite of the popularity of cryptocurrency reaching epic proportions in the past few years, particularly since the beginning of the COVID-19 pandemic, the White House has been silent on the subject of digital assets. Why is President Biden taking a position on cryptocurrency and what does this mean for the future of digital assets in the United States and the world?
It seems the cryptocurrency is everywhere online and in the media. Super Bowl commercials for the first time offered digital currency opportunities while crypto controversies are standard talk show fare.
Cryptocurrencies: A Political Tightrope
Government agencies have not regularly addressed the topic of bitcoin transactions except when the FBI has issued periodic warnings about the prevalence of crypto scams and the Justice Department unveiled its crypto task force.
Government leaders often see the topic of cryptocurrency as a political tightrope. On the one hand, they may want to address the risks of fraud, money laundering and terrorists using the blockchain to fund their dangerious activities. On the other hand, they realize how popular cryptocurrencies are with their constituents and are unwilling to alienate them.
This may explain why President Biden’s executive order was characterized by non-controversial statements such as “we must protect investors, consumers and businesses in the United States” and “we must support technological advances and promote responsible development and use of digital assets.”
The executive order respected the independence of the Federal Reserve Board to take what action it deems necessary for dealing with cryptocurrency, but strongly encouraged the Fed to research and report on its efforts to create a U.S. dollar CBDC (central bank digital currency).
Since the launching of a digital currency is new territory for the government, there are likely to be procedural discussions about which government body has the authority to develop, release and regulate the CBDC.
Another issue emphasized in the executive order is that government regulators should be “encouraged to consider the extent to which investor and market protection measures within their respective jurisdictions may be used to address the risks of digital assets and whether additional measures may be needed.” This is an indication that regulations protecting crypto users will be developed.
Why Did President Biden Issue This Order?
It is worth speculating why the White House is focusing on cryptocurrencies in an executive order, departing from a “hands off” approach and what this could mean for cryptocurrencies in the U.S. and globally.
Taking Action Against Crypto Fraud and Money Laundering
The spread of cyber crime through anonymous bitcoin wallets is skyrocketing. According to CNBC, in 2021, Americans lost a record $14 billion to cryptocurrency fraud. In addition to the need to provide direction to the FBI and the Justice Department’s crypto task force, President Biden was eager to demonstrate White House leadership on this pressing issue.
Adopting a Digital Currency to Bolster the U.S. Dollar
With wider adoption of cryptocurrency, the United States and other governments are naturally concerned about the fate of their fiat currencies. The White House was, therefore, eager to encourage prompt action to adopt a digital currency issued by the Fed, the country’s central bank, to preserve the dominance of the U.S. dollar.
Pleasing Both Crypto Fans and Critics
Politicians, including the president, were reticent for so long on the topic of cryptocurrencies, but recently, that has changed. President Biden presumably concluded that the issue had to be addressed. The wording of the executive order makes it apparent that the White House wanted to show it was serious about combating crypto crime while showing support for innovation and technological development.
Policing Sanctions Avoidance
The Russian invasion of Ukraine and the resulting sanctions against Russia have made the issue of policing the blockchain for money laundering and avoidance of sanctions urgent. The executive order can be considered an essential aspect of policies such as sanctions.
What Does This Mean for Cryptocurrencies?
President Biden was not the first head of state to propose the regulation of cryptocurrency and the establishment of a national digital currency, but U.S. policy is likely to influence governments in other countries. As a result, crypto users can expect to see more protections in place as well as the opportunity to buy U.S. digital currencies backed by the Fed in the future.
While the U.S. government is developing new avenues to protect crypto users, MyChargeBack remains ready to assist those who lose money through bitcoin wallet hacking or fraudulent crypto brokers.
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