Biden addresses the elephant in the room

“fear of suffering is worse than the suffering itself” - a famous quote by author Paulo Coelho - might be how many crypto investors are feeling at the moment. the long anticipated US Presidential order on cryptocurrencies portended to bring doom and gloom to the $2 trillion+ sector. another famous author, Robert Kiyosaki, even predicted that the government would ultimately seize all cryptocurrencies.

however, when it finally arrived, it presented a rather progressive approach to the topic, mostly calling for further study and a unified approach by regulatory bodies. here are some of the highlights.

“fear of suffering is worse than the suffering itself” - a famous quote by author Paulo Coelho - might be how many crypto investors are feeling at the moment. the long anticipated US Presidential order on cryptocurrencies portended to bring doom and gloom to the $2 trillion+ sector. another famous author, Robert Kiyosaki, even predicted that the government would ultimately seize all cryptocurrencies.

however, when it finally arrived, it presented a rather progressive approach to the topic, mostly calling for further study and a unified approach by regulatory bodies. here are some of the highlights.

balanced approach

the measures announced on March 9 focus on the following areas:

• consumer and investor protection: one of the biggest problems with crypto has been that due to the relative novelty of its technology, many new users have been easily swindled by malicious players. whether it’s through education or by compelling crypto platforms to simplify their processes even more, the order seeks to mitigate such incidents.
  
  further, it looks at several hacks of cryptocurrency exchanges and other such organisations, seeking to set a framework for remedy such as the recent $3.6 billion recovery from a hack in 2016.
  
  
• financial stability: this particularly relates to crypto organisations’ ability to pay out the amount of money ‘backed’ by them. while crypto is primarily a peer-to-peer system, there are several centralised exchanges and “stablecoins” pegged to fiat currencies such as the US dollar which essentially assure that they will pay out the equivalent of crypto in fiat currency.
  
  consider the example of the largest stablecoin - Tether - which has about $80 billion worth of its tokens in circulation but backs up significant chunks of it with short-term debt obligations like commercial paper and not wholly in cash reserves. if all of a sudden everyone that held its tokens wanted to exchange them for fiat, it would cause a collapse with far reaching impact.
  
  
• illicit activity: with a focus on the anonymity that crypto enables and reports that Russia is using crypto to circumvent the financial sanctions, Biden called upon Federal agencies and international bodies to work together to mitigate money laundering and other such activities.
  
  
• U.S. competitiveness on a global stage: this calls for “establishing a framework to drive U.S. competitiveness and leadership in, and leveraging of digital asset technologies”. the US is well aware of the benefits of becoming a global leader in any technology, as it did with software innovation - which birthed many of today’s biggest companies. with a Chinese ban on cryptocurrencies as well, it leaves few nations with the might to compete, and presents a good reason why India should follow suit.
  
  
• climate change: the topic that punctured Bitcoin’s rally in the middle of last year around its all time highs. this is already being addressed through several organisations and even national governments taking up renewable energy initiatives for running the hardware that processes crypto transactions. there are also several carbon-neutral cryptocurrencies that run on somewhat centralised servers that are now available in the market. 

the US will also now look into the creation of a central bank digital currency (CBDC) - the digital dollar - similar to India and several other countries which have made the move.