Today is a buy the rumor, sell the news day, as the price of Bitcoin plunged 8% in five hours following Biden’s executive order on digital assets.
The markets reacted favorably to the hype around the imminent crypto executive order, sparked by a leaked comment from US Treasury Secretary candidate Janet Yellen.
She saw the potential benefits of cryptocurrency. However, as soon as Biden signed the order, the markets reversed their gains, bringing Bitcoin down below $40k for the sixth time in as many days.
What is contained in the Executive Order on Cryptocurrency?
Officially, the decree is titled ‘Executive Order Ensuring Responsible Development of Digital Assets.’ Which is focused on the following:
- Consumers, investors, and businesses in the United States should be protected. Protect the financial stability of the United States and the world at large and mitigate systemic risk
- Reduce Illicit Finance and National Security Risks Associated with the Illicit Use of Digital Assets
- To Strengthen the United States’ Leadership in Technology and Economic Competitiveness, and to Retain the United States’ Leadership in the Global Financial System
- Increase Access to Safe and Affordable Financial Services on an Equitable Basis
- Sustain technological advancements and ensure the development and use of digital assets in a responsible manner
- Investigate a Digital Currency Issued by the United States Central Bank (CBDC)
- Anyone with access to the white house briefing room can view and download the paper in its entirety.
The initial reaction of the industry
Faryar Shirzad, Coinbase’s Chief Policy Officer, tweeted following the release:
“The White House appears to recognize and embrace the transformative potential of digital asset technology, as well as the critical role of American leadership.”
Shirzad is an intriguing perspective from someone intimately familiar with cryptocurrency. However, it’s certainly worth noting that Coinbase is a publicly-traded corporation in the United States. One may argue that ‘preserving American leadership’ also entails preserving market share for businesses like Coinbase.
There is still a role for leadership in an open-source, decentralized technological environment. For example, Ethereum continues to turn to Vitalik Buterin for guidance.
Notably, Ripple CEO Brad Carlinghouse, who has fought regulatory authorities for years, stated:
Like many of you, I thought the Biden Admin’s EO would acknowledge crypto, but not detail specifics on next steps for regulation. However, I was pleasantly surprised & inspired by the EO acknowledging the *need* for evolution and alignment of the govt’s approach to crypto.
— Brad Garlinghouse (@bgarlinghouse) March 9, 2022
Garlinghouse and other crypto enterprises may be relieved to have a playbook to guide their regulatory maneuvers. However, markets are concerned about the possibility that the US would seek to overstep the mark.
Anthony Pompliano, a cryptocurrency investor, feels that the ruling demonstrates the US’s intention to lead the new digital financial system, stating that ‘Americans are the ultimate winners here.’
This statement is difficult to dispute because it is stated plainly in the fact sheet. The real document’s section 2.d) states:
“We must re-establish the United States’ leadership in the global financial system, as well as in technical and economic competitiveness, especially via responsible development of payment technologies and digital assets.”
Are the United States concerned that a fragmented financial environment would leave them behind? It will be fascinating to watch the research results, frameworks, coordinated action, and policy evaluations that have been initiated in response to this order’s implementation.
By definition, cryptocurrency is not an industry that a single government can dominate. That was one of the primary motivations for its inception.