The White House Plans To Reveal Government Strategy On Crypto

The United States is clearly heading towards broader digital asset regulations, as the Biden administration would soon release an executive order, which would induce an initial government-wide strategy on dealing with digital assets.

U.S. Federal Agencies, like the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), are already working on risk and opportunity assessments, which will ultimately bring clarity about the status and the risks involved in owning and trading digital assets.

Meanwhile, the SEC and CFTC have already issued guidance letters and statements to suggest how the crypto industry should comply with U.S. policies and laws. However, such a coordinated document would be a first for U.S. watchdogs.

The executive order should be ready in the next set of weeks and presented to U.S President Joe Biden for final approval. It is clear the U.S administration is working rapidly to provide guidance on the new asset class, especially with the boom of crypto sub-sectors like decentralized finance (DeFi), and non-fungible tokens (NFTs).

Senior administration officials already held several meetings, as the White House is facing immense pressure for regulating and taking the lead role in approaching cryptocurrencies. Furthermore, leading crypto executives stressed that the lack of regulatory clarity around cryptos puts the U.S. dollar under a threat, as cryptocurrencies could potentially undermine the dollar’s value and dominance.

Indeed, the widespread global inflation has turned U.S. citizens into searching for an alternative for their savings. While traditional safe-haven assets like gold and other precious metals are hard to reach by ordinary customers, the friction around entering the crypto sector can be easily diminished. For instance, numerous reports suggested that individuals easily transferred the stimulus checks the Biden administration pushed, in order to combat the consequences of COVID-19, into cryptos, which further drowns the U.S. dollar in inflation.

However, recent crypto market events, like the massive 2022 crypto volatility, which saw $1 trillion of its market cap evaporate, may turn down consumer interest.

Nevertheless, regulators could play a massive role in the crypto market, as regulatory bodies can perceive different assets differently. For instance, Bitcoin and Ethereum are considered to be commodities, which means every related product is overseen by the CFTC. However, some of the top-tier crypto projects faced regulatory uncertainty, as the SEC is still fighting Ripple for being an unregistered security product. According to the SEC, Ripple allegedly raised $1.2 billion by selling unregistered tokens.

The Biden administration might issue some directives on the issuing of a central bank digital currency (CBDC) as well since many countries are already exploring or building their own digital currencies.