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Saturday, December 3, 2022

Biden Signs Order on Cryptocurrency, Clamping Down on Rampant Use

President Joe Biden signed an executive order on government regulation of cryptocurrencies on Wednesday, urging the Federal Reserve to look into the possibility of creating its own digital currency.

The endeavor, according to Treasury Secretary Janet Yellen, would “promote a fairer, more inclusive, and more efficient financial system” while combating illicit money and mitigating threats to financial stability and national security.

According to a senior administration source who previewed the directive Tuesday on the condition of anonymity, the Biden administration sees the rising popularity of cryptocurrencies as a chance to investigate the dangers and advantages of digital assets.

Biden also asked the Treasury Department and other federal agencies to investigate the impact of bitcoin on financial stability and national security as part of the executive order.

The directive outlines the first comprehensive government digital assets plan for the United States, according to Biden’s senior economic and national security aides, Brian Deese and Jake Sullivan.

“This will help position the United States to continue playing a leading role in the innovation and governance of the digital assets ecosystem at home and abroad, in a way that protects consumers, is consistent with our democratic values, and advances US global competitiveness,” Deese and Sullivan said in a joint statement released on Wednesday.

The move comes as legislators and administration officials become increasingly concerned that Russia is utilizing cryptocurrencies to evade the impact of sanctions placed on its banks, oligarchs, and oil industry as a result of the invasion of Ukraine.

Senators Elizabeth Warren, Mark Warner, and Jack Reed, all Democrats, requested the Treasury Department last week for details on how it plans to prevent bitcoin from being used to evade sanctions.

Russia will not be able to compensate for the loss of US and European business by resorting to cryptocurrencies, according to the Biden administration. Officials say the Democratic president’s decree had been in the works for months before to Russia’s invasion of Ukraine last month.

“Crypto is really not a workaround for our sanctions,” Daleep Singh, Biden’s senior national security and economic advisor, told CNN on Wednesday.

The banking industry, crypto traders, speculators, and politicians, who have compared the cryptocurrency market to the Wild West, were all looking forward to the executive order.

Despite the hazards, polls reveal that around 16 percent of adult Americans — or 40 million people — have invested in cryptocurrencies, according to the government. And 43% of men between the ages of 18 and 29 have invested in cryptocurrencies.

The largest bitcoin exchange in the United States, Coinbase Global Inc., said it has not witnessed a recent spike in sanctions evasion activities.

“Many participants in the cryptocurrency networks are subject to anti-money laundering sanctions,” Treasury Secretary Janet Yellen said last week, adding that the market isn’t “totally one where things can be skirted.”

In January, the Federal Reserve released a report stating that a digital currency “would best serve the purposes” of the country if created under a scheme in which banks or payment corporations create accounts or digital wallets.

Some digital currency users are excited about the prospect of increasing government participation in the industry.

The directive, according to Adam Zarazinski, CEO of Inca Digital, a crypto data firm that works with multiple government organizations, gives a chance to deliver “new ways to finance.”

“The United States is interested in increasing financial innovation,” Zarazinksi explained. He went on to say that China and Russia were looking at cryptocurrencies and developing their own currencies. According to the White House, more than 100 nations have started or are testing their own digital sovereign currency.

An executive order that gives more legal clarity on government regulation, according to Katherine Dowling, general counsel for Bitwise Asset Management, a cryptocurrency asset management business, would be “a long term good for crypto.”

However, Hilary Allen, a financial regulatory expert at American University, warned against adopting cryptocurrency too quickly.

“I believe that until crypto is properly understood, we should put the brakes on this innovation,” she stated. “As crypto gets increasingly interwoven into our financial system, it poses vulnerabilities for everyone who participates in our economy, not just those who invest in crypto.”

The Treasury Department’s financial literacy arm announced on Tuesday that it will endeavor to create consumer-friendly materials to assist consumers “make educated decisions about digital assets.”

“History has demonstrated that forms of private money have the potential to cause hazards to consumers and the financial system if proper protections are not in place,” said Nellie Liang, undersecretary for domestic finance.

Following Biden’s executive order, bitcoin and cryptocurrency-related equities rose on Wednesday.

According to Coindesk, the price of Bitcoin was up 9.8% at $42,211. In noon trading, shares of bitcoin exchange Coinbase Global jumped 9.3%, while online stockbroker Robinhood Markets rose 4.5 percent.

Riot Blockchain, a bitcoin mining company, increased by 11.5 percent. The number of digital payment platforms has also increased. PayPal increased by 4.9 percent, whereas Block increased by 10.55 percent.

Cedric Blackwater
Cedric Blackwater
Cedric is a journalist with over a decade of experience reporting on local US news, and touching on many global topics. He is currently the lead writer for Bulletin News.

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