The specter of US government regulation has always cast a shadow on crypto, but over the past year, more and more three-letter agencies have turned their attention toward the space. The market’s fear grew to the point that SEC Chairman Gensler had to step in and assuage the concerns by announcing that the US wouldn’t outright ban cryptocurrencies.
Finally, this growing governmental pressure led to news that the president would issue an executive order. The crypto space has always wanted more clarity on how to behave, but with the aggressive stance many of these agencies were adopting, it was assumed that this executive order would do irreparable harm. This week, Biden’s executive order was leaked – and it was about as positive as we could’ve hoped.
The Executive Order
The order defines the magnitude of the crypto space: in 5 years, it’s grown from $14B in total market cap to $3T, with 40M people using it to some extent. It mentions that 100 countries have started to explore Central Bank Digital Currencies (CBDCs).
The executive order identifies a few key measures:
- Protect U.S. Consumers, Investors, and Businesses
- Protect U.S. and Global Financial Stability and Mitigate Systemic Risk
- Mitigate the Illicit Finance and National Security Risks Posed by the Illicit Use of Digital Assets
- Promote U.S. Leadership in Technology and Economic Competitiveness to Reinforce U.S. Leadership in the Global Financial System
- Promote Equitable Access to Safe and Affordable Financial Services
- Support Technological Advances and Ensure Responsible Development and Use of Digital Assets
- Explore a U.S. Central Bank Digital Currency (CBDC)
Some of these items are a substantial departure from the previous stance by the U.S. government. Crypto advocates feared that regulatory overreach would stifle U.S. innovation and drive talent out of the U.S. When the order was leaked a day early, the market jumped a few percent.
Jeremy Allaire, the CEO of Circle (makers of the USDC stablecoin) said this about the executive order on Twitter:
TLDR = this is a watershed moment for crypto, digital assets, and Web 3, akin to the 1996/1997 whole of government wakeup to the commercial internet.