It is the signal of the beginning of a new era for cryptocurrencies, and it has been long awaited. After months of discussions about the opportunities and threats of the blockchain industry for the United States, US President Joe Biden signed an executive order regulating the crypto space on Wednesday. “The United States must maintain its technological leadership in this rapidly growing area, fostering innovation and mitigating risks to consumers, businesses, the broader financial system, and the climate,” the executive order said. A White House official said at the news conference that they are taking a “holistic approach across government.”
As a basis for a future legislative framework, different government agencies will conduct studies on cryptocurrencies within nine months. These concern, for example, the protection of consumers and investors, financial crimes and the assessment of risks to the global financial market through cryptocurrencies. The introduction of a digital dollar as a stable currency is also being discussed. The Biden administration has not yet taken any concrete action with the decree.
Regulation drives upturn in fuel prices
The crypto space reacted bullishly to the momentum. A price rally began on Wednesday night, based on a statement from the Ministry of Finance about the decree being published too early by mistake. In it, US Treasury Secretary Janet Yellen hailed the decree as “historic.” Bitcoin was already up eight percent in the morning compared to the day before, with a total of several billion entering the market. Leading figures in the crypto space also reacted positively to the statement, such as Cameron Winklevoss. The co-founder of crypto exchange Gemini praised the “constructive approach to thoughtful crypto regulation” on Twitter.
“For years, a lack of regulatory clarity has hampered the crypto market in the United States,” Hayden Hughes, CEO of social media trading platform Alpha Impact, said in a note on Wednesday. “Clear guidelines could be a game changer for the industry.” The lack of a regulatory framework repeatedly leads to legal disputes, such as between Ripple and the Securities and Exchange Commission (SEC).
The dangers of regulation
Just a few days ago, the SEC also fined crypto lending platform BlockFi $100 million. The company had illegally sold securities, he said in justification. Discussions about regulation picked up particularly after the start of the Ukraine war. Some feared that Russia could use cryptocurrencies to circumvent Western economic sanctions. So far, this has not been widely confirmed. In the course of this, US politicians have called on the operators of the largest centralized crypto exchanges, such as Coinbase and Binance, to block Russian accounts in recent days.
Clear guidelines could be a turning point for the industry.
Before the decree, some experts warned about the potential dangers of US government intervention, according to Richard Gardner, CEO of Modulus, a leading US technology company. The Biden administration is thus acquiring the power of “ close alternative payment mechanisms or tax them alternatively”. Gardner also fears that the Federal Reserve System (FED) is seeking “total control” over global monetary policy and privacy with the launch of a digital dollar.
One thing is for sure: the executive order will further fuel the bitter battle over crypto legislation in the US “This is the opening shot,” an anonymous insider told Politico in advance. Capitol Coin released a study yesterday indicating that the number of crypto lobbyists in Washington has tripled since 2018. The lobbyists include former high-ranking government officials from the Trump and Obama administrations. Major cryptocurrency exchange Coinbase, blockchain group Ripple, and the Blockchain Association are said to have each spent more than two million US dollars a year for their interests in Washington.
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