WASHINGTON – President Joe Biden’s long-awaited president Executive Decree on cryptocurrency has been met with cautious optimism from much of the financial industry, but with so many important details unresolved, it is far from certain what the political outcome of the order will ultimately be.
The March 9 order marks the first time the White House has formally looked at cryptocurrency, and while it’s essentially a blueprint for the Treasury Department and other regulatory agencies to work out a plan is always a decisive moment.
It is also a time when stakeholders can exert influence to shape what will be the ultimate trajectory of regulation and policy. Digital asset advocates hope regulation will build trust (and encourage the U.S. government to more seriously consider its own digital currency), while banks hope for clear rules of conduct and consumer advocates hope crypto can help consumers. households underserved by the existing financial system. system get a head start and participate more fully in the economy.
“What all of this means in practice will be the devil in the details,” said Josh Lipsky, senior director of the Atlantic Council who previously advised the International Monetary Fund and worked for the Obama White House. “To be regulated is to be legitimized, so it’s about who will be on which side and what those regulations will look like.”
Crypto advocates were largely happy with the executive order. Instead of just focusing on the risks, the executive order also acknowledged what it sees as the potential of cryptocurrency, allaying some fears.
The Blockchain Association called the order “further proof that the crypto ecosystem is now a vital and inseparable part of the national economy”. Markets cheered the move, with bitcoin prices jumping around 10% on Wednesday before falling on Thursday.
And overall, the crypto order sparked a positive reaction from Washington banking corners. The Bank Policy Institute hailed the “clarity” that more federal crypto action would bring, and applauded the idea of integrating crypto and fintech startups into a regulatory system. The trade group noted that “regulated financial institutions have been locked in pending further regulatory action before expanding their digital offerings.”
Banks were more lukewarm on a central bank digital currency, however. The Bank Policy Institute said it believes further research on U.S. digital currency will show that “CBDCs will incur significant and unavoidable costs to the financial system and economy while producing little, if any, tangible benefits.” “.
American Bankers Association President and CEO Rob Nichols said in a statement that the group is “concerned that it is clearly directing federal agencies to begin pursuing a central bank digital currency. before even determining whether a U.S. CBDC is actually “in the national interest” as the order also requires.
What follows is an examination of the short-term and long-term impacts of the administration’s renewed focus on crypto.