The role of cryptocurrencies in both our social lives and in political matters is undeniably growing more and more each day. In relation to this, the White House has long been under pressure to take a more active role in setting regulations for digital assets. The sanctions placed on Russia after its Ukraine invasion, along with worries that Russian businesses and people may use cryptocurrencies to bypass them, have also added to the pressure.
This week, President Joe Biden is expected to sign an executive order on cryptocurrencies outlining the government's objectives regarding Bitcoin and cryptocurrencies. The executive action is expected to charge federal agencies with evaluating the threats and opportunities that Bitcoin and other cryptocurrencies pose to the United States, according to a report by Bloomberg:
According to a Barron's report, the administration believes cryptocurrencies have "economic implications for national security." Therefore besides the White House National Security Council, the State Department, Treasury Department, National Economic Council, and Council of Economic Advisers are also anticipated to be involved in the regulatory efforts.
Will cryptocurrency regulations affect crypto prices?
There is little financial regulation in the world of crypto, and this can raise the question of if cryptocurrency is safe for individual investors.
Usually, financial regulation serves to safeguard investors, prohibit fraudulent activities in the crypto ecosystem, offer clear guidance to allow businesses to develop in the crypto economy, and handle environmental problems associated with crypto mining. However, some fear that regulation could be overly restrictive and stifle innovation, so it should be appropriately balanced.
But how crypto prices will be affected is actually up to the approach of the regulation. In the simplest terms, if the legislation supports the creation of innovation, crypto values may rise. However, if it appears to be restrictive, Bitcoin and other cryptos are very likely to lose value.
Last year, Janet Yellen, U.S. Secretary of the Treasury, warned of an “explosion of danger” from digital markets, especially the misuse of cryptocurrencies, but she also noted that new financial technology may help the country fight crime and injustice.
Time will show what kind of an approach the U.S. government will adopt towards cryptocurrencies and how it will affect crypto prices. But one thing is sure, compared to other countries like China, the U.S. is even late in determining its stance.