Updated: Jul 13
Can The New Biden Administration Have An Inclusive Approach To Cryptos Amid Internal Conflict
Joe Biden took the top office in the U.S. on January 20, and now the new president, along with his nominees in the office, will decide the future of cryptocurrencies by regulating the policies around them for years to come.
The new president enters the White House at a time when Bitcoin has not been faring well — it has recorded a low week, with its value slipping down a little above $38,000 during the inauguration week.
Bitcoin is not the only cryptocurrency to be hit by a low. The value of the second most prominent and popular crypto after Bitcoin — Ethereum — has also gone down and lost momentum in recent times. And now it turns out that the bearish state of these cryptocurrencies is here to stay.
Considering that the cryptocurrencies have seen a rising interest over time and have also been on the receiving end of plenty of speculations, it is no surprise that the ever-growing list of investors might now find themselves more vulnerable as the market continues to slip.
However, the new Biden administration might have some hope to offer, especially for those who have long advocated for regulating cryptocurrencies.
Informed perspective amid new regulations
Biden's aid at the Securities and Exchange Commission would be the former chairperson of Commodity Futures Trading Commission (CFTC), Gary Gensler, and this makes a lot of sense for the crypto world as Gensler is known to understand blockchain and cryptos.
With him heading the securities and exchange board, we can at least hope that there would be more transparent regulatory structures around cryptocurrencies. Other reports have suggested that he may also approve of Bitcoin in exchange-trade funds, and that will imperatively add some positive stability to Bitcoin and more cryptos in the future.
There have also been some significant updates on the regulatory front, as the Financial Crimes Enforcement Network (FinCEN) has extended the timeframe to take inputs on the proposal that states that cryptocurrency exchange platforms need to record address and name on transactions that sum up to more than $3000. The newly proposed regulations from December last year introduce stricter KYC guidelines for cryptocurrency owners. With identities now revealed for large transactions, the very fundamental of transaction anonymity seems that was a founding pillar of cryptocurrencies seems to have taken backstage. For much larger transactions that exceed $10,000, FinCEN has even asked wallet owners to submit their name, address, and transaction purpose.
But there's no hurry to implement the new rules. For now, Biden has put a halt to the entire regulatory process leading to this controversial decision to implement KYC standards to cryptocurrency wallets. The move is to ensure that the regulatory committee members have enough time to review the rules and inputs and come up with a financial decision.
Looking at the work around the regulations, a clear strategy and regulatory framework will be a thing under the new Biden administration.
Welcoming an inevitable transition
Sans regulations, Gensler also acknowledges how Bitcoin can emerge as an inevitable transition. Last year, he stated that it had the potential to be "a catalyst for change," adding that humans now lived in "an age of digital money."
Other market leaders resonate with Gensler's ideas. JP Thieriot, who's the chief executive of Uphold — a California-based cryptocurrency trading platform — admitted how Gensler's inclusive approach could turn out to be a beneficial factor for cryptocurrencies.
According to Thieriot, it was an encouraging sign for cryptocurrencies that the Biden transition team announced that Gensler would be leading the financial policy transition team.
The chief executive of Noble Gold investments, Collin Plume, also pointed out how Biden would be the one to prioritize cryptocurrencies and have an inclusive approach to it while reopening the economy. Advocating for digital money to rest in the Internal Revenue System (IRS) regulatory framework, he said that Biden should look at cryptocurrencies as a "security objective that may set the US financial system on more precise footing."
However, not everyone's going gaga over the inclusion of cryptocurrency in the US' regulatory framework.
Janet Yellen, who is nominated to be the first woman to lead the Treasury Department of the new administration under Biden, has made her stand clear against cryptocurrencies in the past. She has said that they pose a "particular concern" when it comes to funding terrorist activities.
In a recent statement, Yellen said that cryptos are popular with illicit financing, and stressed the need of examining ways that can curb their illegal usage and prevent money laundering.
However, cryptocurrencies will not be a top priority for the newly-elected administration, as the focus would be to get business back on their feet after a year-long economic and financial battle with COVID-19.
With a bit of alignment in administrative and regulatory members' priorities, Bitcoin and other cryptocurrencies could, indeed, find a shape. They could even get a new rulebook, which would make them more regulated and potentially increase their accessibility. The concerns that regulators have is real, but there's so much room for improvement, regulation, and stability as there's ample space for feedback. Besides, because several business structures are now ready to include cryptocurrencies in their trading approach, it will only be wiser for the Biden administration to steadily gain common and inclusive ground on their fate.
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