President Biden signed an executive order earlier this month that directs several federal agencies to develop policies and regulations for cryptocurrencies. Mainstream media reports — and some crypto analysts — linked this development to the U.S. trying to stop Russia from evading financial sanctions that were imposed after Russia invaded Ukraine.
Those reports are wrong.
This executive order has been months in the making. The Biden administration started publicly floating the idea of an executive order last year. And it will take agencies months more to research the issue and come up with any recommendations or a policy framework. That means work on this began months ago — well before Russia invaded Ukraine. And the results of this executive order will likely go into place much too late to prevent Russia from using crypto to evade sanctions (though we’re not entirely sure how big a problem that will be).
This executive order is about something bigger than Russia. It’s the first real effort by the U.S. government to regulate crypto in an organized fashion. No more IRS rules sitting in a vacuum. No more random SEC lawsuits against the crypto industry. For the first time, the government will try to have a coherent approach to regulating crypto.
Biden’s crypto mission is pretty straightforward.
The United States must maintain technological leadership in this rapidly growing space, supporting innovation while mitigating the risks for consumers, businesses, the broader financial system, and the climate.
Biden’s administration is focusing on the types of things governments worry about most:
- Investor protections
- Money laundering
- Use in crimes or to avoid sanctions
- Environmental impact.
What’s more interesting is the openly stated desire that the U.S. “must maintain technological leadership in this rapidly growing space.” This signals the administration understands that crypto is here to stay — both domestically and globally. And that crypto’s role in the world and financial markets is growing.
The other interesting item in this executive order is prioritizing a central bank digital currency (digital dollar) as a matter of “urgency.” The digital dollar has moved beyond a thought experiment and into “let’s make this happen fast” territory.
Bitcoin rose about 8% when news of the executive order broke, so the markets seem to be pretty happy with Biden’s announcement.
Crypto regulations have always been inevitable. And as crypto investors, we should be feeling pretty good about the overall nature of Biden’s executive order. Now we have to wait and see what the agencies come up with. There are millions of ways all of this could go wrong. But for now, we’re off to a good start. And that’s worth celebrating.