On Wednesday, March 9, President Joe Biden released an executive order regarding cryptocurrency and how his administration intends to approach the rapidly growing industry in 2022. The executive order included these key components:
• Examining the risks and benefits of cryptocurrencies.
• Measurement of six critical components, including consumer protection, financial stability, illicit activity, U.S. competitiveness, financial inclusion, and responsible innovation.
• Potentially exploring the options of creating a digital USD. The executive order takes a fundamentally positive approach toward cryptocurrency.
However, after the release of this executive order, the question remains: Is mainstream adoption of cryptocurrency imminent in the U.S.?
It’s evident that Joe Biden and his administration are interested in the fast growing industry and intend to pursue cryptocurrency regulations at some level over the next few years. In the briefing room fact sheet released with the executive order, Biden’s administration fully recognized the monumental growth cryptocurrency has seen over the last five years, moving from a $14 billion market cap to a $3 trillion market cap.
Crypto is a steamrolling train that’s not slowing down anytime soon. There are still some genuine concerns regarding cryptocurrency and its ability to keep a stable market while protecting investors. One of those concerns revolves mainly around a specific cryptocurrency identified as Stablecoins. Stablecoins try to pin their market value to an external reference.
An example of a Stablecoin is USDT (Tether) and its parallel value to the U.S. dollar. U.S. Secretary of the Treasury, Janet Yellen, stated that she’d like to see congress introduce regulations for that sector, mainly addressing the commitment of Stablecoins to being entirely backed by dollars held in reserve. Another considerable concern for cryptocurrency is investor protection. Chainalysis released a report at the beginning of 2022, stating that losses from 2021 to 2022 had nearly doubled from $7.8 billion to $14 billion.
The two most common contributions to these monumental losses are scams and hacks. Social media is a prime target for crypto theft, as they often con regular everyday investors into essentially handing over their crypto, promising returned gains.
In February, the DOJ (Department of Justice) homed in on a young married couple with local New York authorities and made an arrest for alleged conspiracy to launder $4.5 billion in cryptocurrency that was a part of a hack back in 2016 through Bitfinex. As cryptocurrency and the tech behind it continue to develop, it’s abundantly clear that improving security needs to be a priority, most notably within the realm of DeFi apps.
Moreover, in Biden’s executive order, he also clearly stated that he intends to work with industry professionals and financial advisors in potentially pursuing a form of digital currency. Companies such as Microsoft, Starbucks, NewEgg, AMC, and others, have already adopted Bitcoin, among other cryptocurrencies, as accepted payment methods.
It’s apparent as long as the cryptocurrency industry and its leaders work diligently with the U.S. government on regulations and improving its systems, mass adoption does seem imminent.