The Biden administration is preparing to draft Bitcoin and other cryptocurrency regulations.
“The Biden administration is preparing to release an initial government-wide strategy for digital assets as soon as next month and task federal agencies with assessing the risks and opportunities that they pose,” Bloomberg reported.
President Joe Biden’s approach could potentially enable the entirety of the federal government’s administrative apparatus to regulate cryptocurrency under the guise of national security.
Bloomberg said, “The late-stage draft of the executive order details economic, regulatory and national security challenges posed by cryptocurrencies. Meanwhile, the directive would also require other agencies to weigh in — carving out roles for everyone from the State Department to the Commerce Department.”
Globally, there are hundreds of millions of people who use cryptocurrency to store and grow their wealth and to make transactions. Largely, the appeal of cryptocurrency is that it is unregulated and not connected to global financial institutions. There are trillions of dollars invested in cryptocurrencies; this asset class was able to grow so rapidly and robustly precisely because there was minimal regulation restricting its growth and use.
In an era with historic levels of inflation, the wages and savings of the American people are constantly losing value. Storing money in a savings account with a sub-1% interest rate is becoming less appealing to more and more people, so they opt to store their wealth in Bitcoin as its growth tends to outpace inflation.
And with nearly seven in 10 Americans living paycheck to paycheck, storing money in cryptocurrencies like Bitcoin or Ethereum may help them achieve some financial stability.
The recently passed bipartisan infrastructure deal requires cryptocurrency brokers — Coinbase, Crypton.com, Gemini, etc. — to disclose the names and addresses of their customers. In order to coerce compliance with tax laws, the bipartisan infrastructure deal also required cryptocurrency brokers to provide the IRS, and each customer, with a Form 1099-B detailing exchanges, withdrawals, and holdings.
Earlier this month, the Russian central bank proposed an outright ban of cryptocurrencies and last September the Chinese Communist Party declared all cryptocurrency transactions to be illegal. On the other end of the spectrum, El Salvador became the first country in the world to accept Bitcoin as legal tender. In El Salvador, people may use Bitcoin for buying a cup of coffee or a house, or even use it to pay their taxes.
The U.S. government has been preparing to regulate the cryptocurrency market for a while now. Prior to the Biden administration endorsing the idea of regulating crypto, there was a bipartisan coalition in the U.S. Senate pushing for it to be regulated.