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With the White House’s regulatory move, cryptocurrency has made a big splash
An asset class that necessitates a comprehensive government-wide strategy? This is now officially considered a part of the mainstream economy.
January was a bad month for cryptocurrency investors. The total value of the cryptocurrency market has been roughly halved from its all-time high as a months-long slide across the asset class continues.
To be fair, it wasn't just the cryptocurrency market that suffered in January. Equities were mostly down as well. However, the stock market is already heavily regulated. The cryptocurrency market, on the other hand, is frequently referred to as the "wild west" by Securities and Exchange Commission Chairman Gary Gensler.
Following the January market rout, there has been no shortage of financial industry luminaries speaking out about cryptocurrency. For example, Nobel laureate economist Paul Krugman recently compared the volatile cryptocurrency market to the subprime mortgage crisis (which sparked the Great Recession more than a decade ago).
Krugman was cautious about anything in the crypto markets posing systemic risks in the same way that the subprime mortgage crisis did. Nonetheless, he stated that "cryptocurrencies, with their huge price fluctuations that appear to be unrelated to fundamentals, are about as risky as an asset class can get."
The risk of dealing in cryptocurrencies is not limited to price fluctuations. For years, cryptocurrency marketplaces have been plagued by fraud, money laundering, and outright theft.
The Federal Trade Commission recently released new data indicating a historic increase in online scams last year, and the agency is blaming the massive increase on illicit cryptocurrency investment schemes promoted on social media. Meanwhile, cryptocurrency money laundering is still a major concern. Binance, the world's largest cryptocurrency exchange, restricted 281 personal accounts of Nigerian users on January 29 in an effort to comply with international money laundering laws.
The SEC has long been interested in cryptocurrency markets; in fact, Gary Gensler came into office advocating for crypto regulation reform. But now, in the aftermath of a particularly brutal period for cryptocurrency investors and in the midst of a bountiful period for crypto fraudsters, the SEC appears to be gaining a powerful ally from higher up the food chain.
The Biden administration is about to release a government-wide cryptocurrency regulation strategy, according to Bloomberg News. According to reports, this strategy will take the form of a National Security Council memorandum, which could be released before the end of February. The NSC memorandum requires federal agencies to assess the risks and opportunities that cryptocurrency presents in their areas of expertise. The impact of digital assets on financial stability, as well as the possibility of standardising crypto regulations across international borders, will be examined in the memorandum. Finally, the memorandum will include information about a potential central bank digital currency.
With cryptocurrency becoming more mainstream, it makes sense for federal agencies to consider how the proliferation of cryptocurrency may affect their operations, for better or worse. It also seems logical, especially in light of recent market volatility, to consider stability in relation to cryptocurrency. Exploring collaboration with other countries in relation to assets that cross geographical boundaries is a no-brainer.
But I guess you'll have to talk to a bigger crypto-nerd than me about the last part of that. With 97 percent of dollars in circulation already consisting of nothing more than a string of digital code held by a commercial bank, and one of the points of cryptocurrency in the first place being decentralisation and non-reliance on any particular government, I'm not sure what a central bank digital currency would provide that we don't already have. I guess I'll just have to wait for the memo like everyone else.
Although insiders in any industry rarely roll out the red carpet for new regulations, the Biden administration's renewed focus on cryptocurrency may be cause for celebration among crypto enthusiasts. An asset class that can be ignored by the White House may be easy to dismiss as a novelty, a fad, or a meme. But an asset class that necessitates a comprehensive government-wide regulatory strategy? That is simply a feature of the mainstream economy, my friends.
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By Crypto PiratesAn asset class that necessitates a comprehensive government-wide strategy? This is now officially considered a part of the mainstream economy.
January was a bad month for cryptocurrency investors. The total value of the cryptocurrency market has been roughly halved from its all-time high as a months-long slide across the asset class continues.
To be fair, it wasn't just the cryptocurrency market that suffered in January. Equities were mostly down as well. However, the stock market is already heavily regulated. The cryptocurrency market, on the other hand, is frequently referred to as the "wild west" by Securities and Exchange Commission Chairman Gary Gensler.
Following the January market rout, there has been no shortage of financial industry luminaries speaking out about cryptocurrency. For example, Nobel laureate economist Paul Krugman recently compared the volatile cryptocurrency market to the subprime mortgage crisis (which sparked the Great Recession more than a decade ago).
Krugman was cautious about anything in the crypto markets posing systemic risks in the same way that the subprime mortgage crisis did. Nonetheless, he stated that "cryptocurrencies, with their huge price fluctuations that appear to be unrelated to fundamentals, are about as risky as an asset class can get."
The risk of dealing in cryptocurrencies is not limited to price fluctuations. For years, cryptocurrency marketplaces have been plagued by fraud, money laundering, and outright theft.
The Federal Trade Commission recently released new data indicating a historic increase in online scams last year, and the agency is blaming the massive increase on illicit cryptocurrency investment schemes promoted on social media. Meanwhile, cryptocurrency money laundering is still a major concern. Binance, the world's largest cryptocurrency exchange, restricted 281 personal accounts of Nigerian users on January 29 in an effort to comply with international money laundering laws.
The SEC has long been interested in cryptocurrency markets; in fact, Gary Gensler came into office advocating for crypto regulation reform. But now, in the aftermath of a particularly brutal period for cryptocurrency investors and in the midst of a bountiful period for crypto fraudsters, the SEC appears to be gaining a powerful ally from higher up the food chain.
The Biden administration is about to release a government-wide cryptocurrency regulation strategy, according to Bloomberg News. According to reports, this strategy will take the form of a National Security Council memorandum, which could be released before the end of February. The NSC memorandum requires federal agencies to assess the risks and opportunities that cryptocurrency presents in their areas of expertise. The impact of digital assets on financial stability, as well as the possibility of standardising crypto regulations across international borders, will be examined in the memorandum. Finally, the memorandum will include information about a potential central bank digital currency.
With cryptocurrency becoming more mainstream, it makes sense for federal agencies to consider how the proliferation of cryptocurrency may affect their operations, for better or worse. It also seems logical, especially in light of recent market volatility, to consider stability in relation to cryptocurrency. Exploring collaboration with other countries in relation to assets that cross geographical boundaries is a no-brainer.
But I guess you'll have to talk to a bigger crypto-nerd than me about the last part of that. With 97 percent of dollars in circulation already consisting of nothing more than a string of digital code held by a commercial bank, and one of the points of cryptocurrency in the first place being decentralisation and non-reliance on any particular government, I'm not sure what a central bank digital currency would provide that we don't already have. I guess I'll just have to wait for the memo like everyone else.
Although insiders in any industry rarely roll out the red carpet for new regulations, the Biden administration's renewed focus on cryptocurrency may be cause for celebration among crypto enthusiasts. An asset class that can be ignored by the White House may be easy to dismiss as a novelty, a fad, or a meme. But an asset class that necessitates a comprehensive government-wide regulatory strategy? That is simply a feature of the mainstream economy, my friends.
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