Biden Is Ready to Regulate Crypto: Here’s Why I’m Not Worried

While the crypto market is in the midst of a significant rally, one likely fueled by the banking fiasco, the Biden administration recently released its annual economic report of the president, and it could prove to be a challenging hurdle for the nascent asset class.

The report covers a variety of topics ranging from unemployment, supply chain challenges, climate change and of course cryptocurrency. To say that the report is less than friendly to crypto might be an understatement, but let’s take a look at some of the main points.

What the report had to say

The underlying tone of the Biden administration’s view of crypto could be described as sarcastic. Look no further than the chapter title “Digital Assets: Learning about Basic Financial Principles.”

The analysis of cryptocurrency is in a format where assumed requirements and benefits of cryptocurrency are presented, such as improving payment systems, increasing financial inclusion or alternative ways of holding value. These are then countered with opposing arguments that the promise of cryptocurrencies is hollow and built on the idea of ​​artificial scarcity. In the words of the report, “crypto-assets have provided none of these benefits” and “many of them have no fundamental value.”

In my opinion, the tone and narrative of the report seems to have ulterior motives rather than simply protecting investors, as it so eloquently claims.

Instead, it likely signals that the Biden administration is laying the groundwork for more targeted regulation of the industry. Based on several high-profile lawsuits as early as 2023, this looks like it can only get worse. Second, this targeting appears to be in preparation for the rollout of the US government’s new FedNow, a 24/7 instant payment system to be unveiled in late 2023 and touted as a true solution that could dramatically streamline financial processes in the US, or so. claims the report. Finally, the justification of cryptocurrencies paves the way for the introduction of the government’s own central bank digital currency (CBDC), which will essentially turn the US dollar into a digital asset.

So what does all this mean for the average crypto investor?

At first glance, the most worrying aspect may be the looming regulation. It is more than likely that a majority of cryptocurrencies in circulation will be considered securities and thus subject to increased regulation in the coming years or months. This could also lead to a dramatic restructuring of the many companies whose business models depend on digital assets.

Suppose lawmakers decide to take an action that does not help promote growth, but rather hinders the development of cryptocurrencies and digital assets. If so, it could cause a significant blow to prices.

Why am I not worried

While this may sound like doom and gloom, there is still hope.

Due to their decentralized nature, cryptocurrencies are beyond the control of any government or agency. In addition, cryptocurrencies are traded internationally. Let’s say the US imposes broad and comprehensive regulation of crypto. If this happens, it may be less than ideal, but the reality is that regulations in one country may not have a significant impact on the global market.

However, for those who want to prepare for this possible future, it may be beneficial to prioritize investing in some of the most decentralized cryptocurrencies, such as Bitcoin (BTC 5.35%) and Ethereum (ETH 3.88%). Unlike other cryptocurrencies that rely on centralized governments or have questionable regulatory compliance, Bitcoin and Ethereum are less vulnerable to potential regulation.

While regulation is often portrayed negatively, there is some hope in believing that regulation can actually legitimize digital assets. The idea is that clearer regulations could actually benefit the industry by providing certainty for investors and encouraging institutional use of digital currencies.

While the report seems damning, it’s not the first time a country has taken a less-than-favorable approach to crypto. While the landscape may change significantly in the coming years, prioritizing investments in the most proven and decentralized cryptocurrencies should provide investors with the most peace of mind and likely the most generous returns.