US president Joe Biden signs executive order on cryptocurrency as its use explodes

US president Joe Biden signs executive order on cryptocurrency as its use explodes

US president Joe Biden signs executive order on cryptocurrency as its use explodes

The order calls for a review of existing laws and regulations governing cryptocurrencies, including those related to money laundering and consumer protection.

The order directs the Fed to conduct research into whether it should issue its own cryptocurrency, according to the official. The Fed already has authority under the Bank Holding Company Act to provide payment systems for commercial banks, and could expand that role further.

Deese and Sullivan say the order also seeks to ensure that consumers are protected from fraud and cyberattacks involving virtual currencies. They say the order requires the Consumer Financial Protection Bureau to develop rules requiring companies offering products tied to virtual currencies such as bitcoin to comply with anti-fraud laws and to disclose information about the nature of transactions.

They also call for the Securities Exchange Commission to update trading rules for securities linked to virtual currencies.

The order does not require the SEC to regulate initial coin offerings, the type of investment where startups sell shares in exchange for newly minted coins. But the SEC has been studying how ICOs work since 2017, and has proposed some changes.

In addition to the SEC, the order asks the Commodity Futures Trading Commission to look into whether futures contracts tied to cryptocurrencies constitute commodities within the meaning of the CFTC’s jurisdiction.

The order says the CFTC “should consider whether there are opportunities to improve the efficiency, transparency, and accountability of markets for certain types of cryptoassets.”

Cryptocurrency Markets

The digital currency market has been volatile lately. Bitcoin prices are down about 30% since hitting record highs in December 2017. Ethereum prices fell about 50% over the same period. Other cryptocurrencies like Ripple’s XRP and Litecoin have lost even more value. But some experts say there could be a reason behind the recent volatility. They believe it might be due to a major change in how people buy bitcoin. A report published this week suggests that the number of people buying cryptocurrency directly from exchanges — rather than mining it themselves — has increased dramatically. That could mean fewer people are selling their coins, driving up prices. “There’s definitely a lot of speculation,” says Charles Hayter, founder of CryptoCompare, a site that tracks crypto markets. “But we’re seeing a shift towards retail investors.”

Hayter says he expects the price of bitcoin will continue to rise, but at a slower rate. He thinks the current drop is just a correction after an unsustainable run-up. “I think we’ll see a new all-time high before too long,” he says.

Biden’s Order

The order was signed by Vice President Mike Pence, who oversees the White House Office of Management and Budget. It directs the Treasury Department to study the risks and benefits of issuing U.S.-based digital currencies. The order also calls on the Federal Reserve to examine the potential impact of using central bank money to back a national cryptocurrency. The Fed already has the authority under the Bank Holding Companies Act to provide payment systems to commercial banks. The order says the Fed should determine if those powers can be used to create a digital currency.

“This order recognizes the growing importance of blockchain technology and other distributed ledger technologies (DLTs) in our economy and society,” said Treasury Secretary Steven Mnuchin. “It provides the administration with the opportunity to assess the best way forward for DLT innovation and regulation while protecting consumers and ensuring the integrity of the financial system.”

Mnuchin added: “We want to ensure that any regulatory framework or policy decisions made today do not hold back the development of these innovative technologies that hold promise for greater efficiencies and economic growth.”

Mnuchin said the order would help the government understand what regulations may be needed to protect consumers and promote competition.

Bitcoin vs. Fiat Currency

While many people view bitcoin as a form of alternative currency, others argue that it’s simply a better version of fiat currency.

Fiat currency is backed by governments and issued by central banks. It includes dollars, euros, pounds and yen. Cryptocurrencies aren’t backed by anything, so they’re considered less reliable.

“Crypto is a store of value, but it’s not a medium of exchange,” says Chris Burniske, co-founder of ARK Invest. “You don’t need to pay your rent with bitcoin because you can always go to the local shop and get paid in dollars.”

Burniske adds that the fact that bitcoin transactions are irreversible makes them attractive to criminals. “If I steal $100 worth of bitcoin from you, I can never give it back,” he says. “That means I can sell it for cash, which I can then spend on something else.”

Burniske says that while bitcoin is gaining popularity among speculators, most people still prefer traditional forms of currency. “People are looking for ways to hedge against inflation,” he says. “They want to own assets that appreciate in value over time.”



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