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Biden’s cryptocurrency framework is a step in the right direction

Biden’s cryptocurrency framework is a step in the right direction

Biden will also consider creating a federal framework to regulate nonbank payment providers, some of which now offer cryptocurrency services. The framework will also provide financial stability by having the Treasury bolster financial institutions’ capacity to identify, track and analyze emerging strategic risks and mitigate cyber vulnerabilities.

The recommendations promote the advancement of responsible innovation in digital assets. Biden does this by having the Office of Science and Technology Policy and the National Science Foundation (NSF) develop a Digital Assets Research and Development Agenda, as well as providing regulatory guidance and technical assistance to innovative American firms in the industry. The NSF will also back social sciences and education to promote safe and responsible digital asset use.

This is a step in the right direction for regulators as it allows them to first understand both the technological benefits of this technology while also tracking the environmental impacts in order to provide a clear strategy for the industry to move forward. This will allow the United States to reinforce its global financial leadership and competitiveness by helping innovative technology and digital asset firms to become stronger in international markets as well as assist foreign and developing countries in building out their digital asset infrastructure with U.S. values intact.

The area where the framework has received the most resistance is related to exploring a U.S. Central Bank Digital Currency (CBDC). While at face value, CBDCs seem to be the best of both fiat and cryptocurrencies, the implications can have widespread negative effects. The recommendations note potential benefits of a U.S. CBDC, such as a more efficient payment system, faster cross-border transactions and environmental sustainability.

Related: Iota co-founder: Lummis–Gillibrand is a blessing for the crypto industry

While these certainly are positives, a CBDC’s main flaw stems from centralization. Having a centralized system governing CBDCs means they are much more easily tracked, have more vulnerable systems when compared to that of Bitcoin, and can lead to a potential increase in data breaches.

With that said, Biden’s officials are simply exploring the use case for CBDCs, meaning that he and his regulators are gathering feedback to determine the best course of action.

Cryptocurrencies have existed for over a decade. Yet, despite the industry looking to the government to provide the regulatory clarity needed to remove much of the uncertainty and doubt, it has not been until this year that the industry finally received an indication of what that clarity may look like.

Biden and the regulatory agencies that submitted nine reports to him have created the first-ever comprehensive regulatory framework for cryptocurrencies. It does a commendable job targeting the areas that are most in need of regulation and by increasing research in this area along with listening to market experts, what is a great first step can become exactly what the industry needs to continue to grow and innovate without a looming threat over its shoulder.

Biden will also consider creating a federal framework to regulate nonbank payment providers, some of which now offer cryptocurrency services. The framework will also provide financial stability by having the Treasury bolster financial institutions’ capacity to identify, track and analyze emerging strategic risks and mitigate cyber vulnerabilities.

The recommendations promote the advancement of responsible innovation in digital assets. Biden does this by having the Office of Science and Technology Policy and the National Science Foundation (NSF) develop a Digital Assets Research and Development Agenda, as well as providing regulatory guidance and technical assistance to innovative American firms in the industry. The NSF will also back social sciences and education to promote safe and responsible digital asset use.

This is a step in the right direction for regulators as it allows them to first understand both the technological benefits of this technology while also tracking the environmental impacts in order to provide a clear strategy for the industry to move forward. This will allow the United States to reinforce its global financial leadership and competitiveness by helping innovative technology and digital asset firms to become stronger in international markets as well as assist foreign and developing countries in building out their digital asset infrastructure with U.S. values intact.

The area where the framework has received the most resistance is related to exploring a U.S. Central Bank Digital Currency (CBDC). While at face value, CBDCs seem to be the best of both fiat and cryptocurrencies, the implications can have widespread negative effects. The recommendations note potential benefits of a U.S. CBDC, such as a more efficient payment system, faster cross-border transactions and environmental sustainability.

Related: Iota co-founder: Lummis–Gillibrand is a blessing for the crypto industry

While these certainly are positives, a CBDC’s main flaw stems from centralization. Having a centralized system governing CBDCs means they are much more easily tracked, have more vulnerable systems when compared to that of Bitcoin, and can lead to a potential increase in data breaches.

With that said, Biden’s officials are simply exploring the use case for CBDCs, meaning that he and his regulators are gathering feedback to determine the best course of action.

Cryptocurrencies have existed for over a decade. Yet, despite the industry looking to the government to provide the regulatory clarity needed to remove much of the uncertainty and doubt, it has not been until this year that the industry finally received an indication of what that clarity may look like.

Biden and the regulatory agencies that submitted nine reports to him have created the first-ever comprehensive regulatory framework for cryptocurrencies. It does a commendable job targeting the areas that are most in need of regulation and by increasing research in this area along with listening to market experts, what is a great first step can become exactly what the industry needs to continue to grow and innovate without a looming threat over its shoulder.