The law is coming to the cryptocurrency market. That may be a good thing for crypto investors, experts say.
President Joe Biden signed an executive order Wednesday morning to develop the first US-based strategy for cryptocurrencies and any other U.S. central bank digital currency.
The executive mandate calls on regulators including the Treasury to review digital financial risks, develop policy recommendations and "ensure adequate oversight and protection of any systemic financial risks caused by digital assets," according to a White House fact sheet.
In a statement issued by the White House, National Economic Council Director Brian Deese and National Security Adviser Jake Sullivan said, stability, and nature. ”
Crypto prices jumped in the news, with bitcoin rising more than 9% from 5 pm E.T. price on Tuesday, according to data from CoinMarketCap. The price of Bitcoin was almost $ 42,000 per coin since Wednesday morning. The price hike began on Tuesday after the Treasury reportedly mistakenly published a statement on the orders of officials, which had not yet been officially announced.
While some cryptocurrency advocates are against the law out of concern that it could hurt a restart, experts say regulation could be a good thing for crypto adoption, security and more.
How crypto rules can affect discovery
About 16% of American adults - about 40 million people - invest, trade or use secret money, according to a White House affidavit. But due to a lack of government regulation and extreme price fluctuations, many investors have been reluctant to jump on the crypto bandwagon, and financial advisers have stopped recommending it to portfolios.
That could change if there are rules, says Edward Moya, a senior market analyst at OANDA.
"If the average investor feels more confident that the crypto environment is secure, there could be significant growth here," Spirit said. "Most investors would be very happy about it."
John Wu, president of Ava Labs, who supports the development of the Avalanche blockchain community, agrees that regulation could help promote adoption.
"Users, businesses, and projects will have clear guidelines for what they can do and obligations such as taxes and reporting compliance," Wu told Money via email.
How regulations can affect crypto prices
While it is difficult to predict what will happen to crypto prices in any given period, regulations may increase crypto prices in the long run.
The total market capitalization of crypto - currently estimated at $ 1.8 trillion - could double within two years if an effective regulation cycle is put in place, Spirit said.
Down the road, when the rules allow the market to stabilize, volatility will gradually subside, Tally Greenberg, head of business development at Allnodes, told Money in an email.
There will be a few goods that roar at night for the wrong reason, which is a good development, Greenberg said.
How crypto rules can help with security
Nearly $ 14 billion in fraudulent transactions took place in the cryptocurrency world by 2021, an increase of 79% since last year, according to data company Chainalysis, a previously reported currency. Securities and Exchange Commission chairman Gary Gensler has called crypto "Wild West" due to a lack of protection for investors.
The White House decree seeks to change this, as it "will protect the long-term effectiveness of key national security tools such as sanctions and anti-money laundering structures," according to Deese and Sullivan.
Experts say it is acceptable to have more security in space.
"Better security is needed in crypto trading and for investors who frequently appear in these forums," Greenberg said.
How crypto rules can encourage innovation
Biden's mandate "will help the US continue to play a leading role in innovation," the ecosystem of digital assets at home and abroad, according to a White House statement - and experts agree that regulation could help technological growth in crypto. industry.
"It would be an amazing opportunity for the U.S. to strengthen a comprehensive, but effective policy framework for cryptocurrencies that not only promotes innovation, but has established the U.S. as a leader in blockchain and internet economics," Wu said.
Incorporating additional consumer protection may provide a path to additional crypto investment products, as crypto advocates for bitcoin trading have long been pushing.
Cameron Winklevoss, founder of crypto exchange Gemini, has called the executive order a "water crisis" that "opens the way for a national crypto-regulatory framework that will allow developers to build on the coast and ensure the US remains a leader in crypto," tweet Wednesday.
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Courtesy Grizler.com
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