Why Most Crypto Contributors Are Excited For The Biden Administration To Get Into Digital Currency

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It has been a momentous few weeks in crypto. Amid Russia’s invasion of Ukraine, millions of dollars in cryptocurrency donations have flowed to the Ukrainian government and relief efforts, providing a lifeline for those without access to traditional banks. On the other hand, regulators fear that crypto might provide Russian oligarchs with a way around sanctions (although no concrete evidence has shown that this is the case). Earlier this week, rumors spread that President Joe Biden was set to issue an executive order cracking down on crypto, particularly regarding its role in this geopolitical dispute.
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But many crypto insiders were pleasantly surprised when the administration issued its executive order on Wednesday, marking the first time the White House has officially weighed in on cryptocurrencies. The order acknowledged the popularity of cryptocurrencies and directed the US Treasury Department and other federal agencies to coordinate their efforts to develop a regulatory plan. “I’m pretty damn optimistic about it,” says Alexis Ohanian, the co-founder of Reddit who is now a major investor in crypto technology. “I am grateful that we are at the point where the usefulness of this technology has been very evident at all levels of our government.”

The order directs various agencies to study and plan cryptocurrency policy in key areas such as consumer protection, national security, and illicit finance. It also urges the Federal Reserve to continue exploring the development of a US central bank digital currency (CBDC) – a digital US dollar that would be widely available to the general public and could make digital transactions safer, faster and more secure. less expensive.. TIME spoke to several crypto leaders about the executive order. Here are the main reasons why they are generally excited.

Tone signals positivity about cryptocurrency

The tone of the executive order is evident from the very first line of the fact sheet, which comments on the “explosive growth” of digital assets. The order then states that the U.S. “must maintain technology leadership in this rapidly growing space.”

Kristin Smith, executive director of the Blockchain Association, a DC-based crypto lobbying group, says the order language is “incredibly bullish, especially compared to the last administration, which was much more hostile to crypto.” (President Trump tweeted in 2019 that he was “not a fan” of cryptocurrencies and that they were “based on thin air.”) “We’re pretty happy; it’s a recognition that this is an important growing space,” Smith says.

Jeremy Allaire, co-founder and CEO of Circle, the digital currency company behind the world’s second largest stablecoin, went further, writing on Twitter that the order represents a “watershed moment for crypto, digital assets and the Web 3, similar to the 1996/1997 government-wide awareness of the commercial Internet, and the market seemed to agree with it: Bitcoin jumped 9% on Wednesday afternoon.

A thoughtful look at the risks

Of course, the executive order is not uniformly positive: it exposes the many risks of cryptocurrencies, including the prevalence of scams, its use in illicit finance, and environmental concerns.

But Smith says the details and nuances of the report show the Biden administration’s commitment to carefully studying the space. “They asked a really good set of questions that relate to a lot of policy goals,” she says. “They don’t predetermine policy outcomes, but rather have a really methodical and thoughtful process for finding answers and determining where the regulatory gaps are.”

Preparing the ground for regulatory clarity

Over the past two years, different government agencies have been jostling for the power to regulate cryptocurrencies, including the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). Although the order does not specify who is in charge, it calls on the various regulators to create a united front and determine spheres of influence and a chain of command.

These agencies publicly lined up in support on Wednesday. CFTC Chairman Rostin Behnam wrote that the order would be “ensure greater cooperation and coordination between different agencies at the cabinet level. SEC Chairman Gary Gensler posted a similar statement on Twitter. treasury secretary Janet Yellen wrote in a statement that she would work under the directives of the order of “promote a fairer, more inclusive and more efficient financial system.

Meanwhile, in the crypto world, there are libertarians who take a tough stance against any kind of regulation. But most cryptocurrency platform leaders are already complying with government know-your-customer (KYC) regulations and have said they want more clarity, not less, on their responsibilities. “There are strong reasons to believe that the lack of regulatory guidance and political certainty has hampered the ability to responsible investors and entrepreneurs to innovate in this space because they don’t know what regulations they might face two, three or four years from now if they are successful,” says Ariel Zetlin-Jones, associate professor of economics at Carnegie Mellon University. . Tepper School of Business. “So to the extent that this executive order will spur a lot of agencies to establish some sort of predictable policy rationale behind how blockchain and crypto innovations will be handled, one would think it would build enthusiasm for invest in this space.”

Sam Kazemian, founder of stablecoin Frax, agrees. “I don’t see it in black or white. I think in democratic and liberal societies like ours, people want to see regulations, fairness and transparency,” he says. “We’re very collaborative and cooperative, and we want to make sure we’re on the right side of history.”

Crypto lobbying in Washington will only increase

Biden’s order doesn’t actually make any immediate demands, but rather calls for research to take place over the course of the year, ultimately leading to a set of actionable recommendations. Crypto boosters are taking this process as a green light to flood Washington with suggestions. “This [executive order] should be seen as the greatest opportunity to engage with policy makers on the issues that matter,” Allaire wrote on Twitter.

DC’s crypto lobbying presence is already significant: its spending rose from $2.2 million in 2018 to $9 million in 2021, report says this week by Public Citizen, a progressive advocacy group. The Blockchain Association, one of the biggest lobby groups, should continue to play an important role in the conversations to come this year. “Some people from the government have already contacted us asking us to come talk to them,” Smith says. “We have a lot of work ahead of us over the next six months or so.”

“I know a few regulators and people in office. They always have my number if they want to talk about that stuff,” Ohanian said. “I will definitely continue to be a resource as best I can.”

The digital dollar is still a long way off

The issue of central bank digital currencies (CBDCs) is controversial in the crypto community. While a government-issued digital currency could be useful in fostering greater access to the financial system, many believe it would go against the decentralized ideals of crypto. Biden’s order makes no statement either way, but calls for a study to determine whether a CBDC would “enhance or hinder” financial systems and the strength of the U.S. dollar.

While a digital dollar would theoretically compete with Kazemian’s Frax stablecoin, he says he’s not particularly concerned about this development. “Government timelines…are so slow that the first real-world payments, if they ever happen, won’t be until 2026,” he says. “That’s why I think it’s important for the private sector and these innovations to stay in the United States and for people with expertise to actually work with the government.”

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