On March 9th, 2022, President Biden signed an executive order to examine the risks and benefits of cryptocurrencies on the global economy.
The cryptocurrency market reacted positively as a result of this announcement, as many take this order as a sign that crypto is here to stay, and as an acknowledgment of what many already believe - that this is the official beginning of a rapid digitization of our economy onto a new standard.
The White House has also signaled a move towards further exploring the creation of a U.S. Central Bank Digital Currency (CDBC), and to investigating what will be needed from an infrastructure standpoint to make this a reality.
Once you've read this article, you'll be conversational about the 6 key priorities that are addressed by this order, and how it impacts the future of technological innovation, and the global economy.
Now, let's dive in.
Consumer & Investor Protection
The order directs the Department of Treasury to look at ways to protect consumers and investors, as more and more people invest in emerging asset classes related to crypto currency.
While the White House states that over 40 million people have traded in cryptocurrency, there are still many investors and businesses that have remained on the sideline out of fear of being scammed, or misinterpreting regulations that have not been well-defined.
This order should help to make consumers and investors more confident to invest in cryptocurrency in the future.
This order encourages the Financial Stability Oversight Council to identify financial risks to the economy created by the emergency of cryptocurrency.
Examples of risks that have been documented in the past include :
- The potential for fraud and scams related to ICOs (Initial Coin Offerings) and other forms of digital assets;
- The potential for volatility to cause harm to existing financial products and services;
- The potential to disrupt consumer lending
For a deeper dive on this topic, check out the Global Financial Stability Report, issued in October of last year by the International Monetary Fund.
The order directs all government agencies to bring more focus to mitigating the use of cryptocurrency to facilitate illegal activity.
It's been widely believed by the general public that cryptocurrency has heavy ties to organized crime, drug smuggling, and other illicit activity. While crypto crime has reached a high point, and certainly should be looked at more closely, it's also encouraging that a recent report by Chainalysis determined that only .15% of transactions in 2021 were deemed illicit.
This is an encouraging sign that cryptocurrency is reaching higher levels of mainstream adoption, however this order seeks to continue to reduce risks associated with use by the "bad players".
US Leadership in Technology & Global Finance
The order directs the Department of Commerce to establish frameworks for ensuring that the United States remains competitive, and positioned as a global leader of innovation as we rapidly continue our move towards mainstream adoption with cryptocurrency.
This aspect of the order is particularly exciting for anyone that is interested in being a part of all the new opportunities emerging around Web3 and the creator economy. As government embraces emerging tech, there will be likely be more opportunities to get involved, and less risk in doing so.
The order directs the Secretary of Treasury and related agencies to put focus on ensuring that there are safe, affordable, and accessible options for underserved communities to participate in the financial system.
Some interesting stats from a report issued last year by Pew Research:
Adults under 50 (31%) and men (35%) are more likely than older Americans (16%) and women (15%), respectively, to say they have heard a lot about cryptocurrency.
The share of adults who have heard a lot about cryptocurrency also varies by race, ethnicity and household income. For example, 43% of Asian Americans say they have heard a lot about cryptocurrency, compared with 29% of Hispanic adults and about a quarter of Black or White adults. Americans with higher incomes (31%) are more likely than those with middle (25%) and lower incomes (21%) to have heard a lot about cryptocurrency.
The order puts emphasis on the need to ensure responsible innovation as more and more businesses and individuals enter into creating solutions on the blockchain and with cryptocurrency. The order seeks to prioritize privacy, security, combating illicit exploitation, and reducing negative climate impacts.
More oversight and regulation in these areas should serve to make more parties comfortable with beginning to look at Web3 use cases for their existing businesses, which in term should stimulate innovation and technological progress.
In closing, it is my hope that this has served to arm you with a basic understanding of what this order symbolizes for the future of cryptocurrency, and it's further adoption by society as a whole.
Interested in continuing to learn more about Web3 and Crypto topics that relate to running an online business as a coach, consultant, or course creator?
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