Joe Biden Signed an Executive Order Related to Cryptocurrency: Here’s What Will Happen!

Illustrated By: Marsha

As per report made by The White House's official website, on March 9, 2022, the United States (US) President, Joe Biden, signed an executive order relating to the phenomenon of the circulation of cryptocurrency as a digital asset. In the warrant, Joe Biden directed the US government to study the characteristics of cryptocurrencies, further examine the risks and benefits of these currencies to the economy, and then formulate regulations and policies to monitor the trading activities of these digital assets. At the present time, at least more than 40 million US citizens invest in digital assets, including cryptocurrency. Therefore, it’s about time for the US Government to establish policies that have sufficient power to regulate trading activities of cryptocurrency. With the issuance of this executive order, the US government has provided support for transactional activities related to cryptocurrency assets that are increasingly in demand by the public in the digital era.

This news reaped various positive responses from experts and also cryptocurrency trading enthusiasts from the US. These people perceived the executive order from President Biden as one of the prominent upgrades in the realm of digital asset trading the government can establish. According to Investopedia, cryptocurrencies or “crypto” are virtual currencies that are secured by a cryptographic system, which makes it almost impossible to counterfeit or duplicate, and all transactions will be recorded on the blockchain as a data storage ledger. Currently, most cryptocurrencies are not issued by any central authority, making them theoretically immune to government interference or manipulation.

The phenomenon of the skyrocketing popularity of using cryptocurrency in the digital era is still relatively new, therefore the public is extremely enthusiastic about welcoming the government's participation in the cryptocurrency sector which can bring various benefits into it. In the US, numerous cryptocurrency users have already made advanced use of this virtual currency as a tool for casual transactional activities as in the initial function of physical dollars. Some of the noted positive effects from President Biden's executive order that can possibly occur in the future include:

1.Increase in Cryptocurrency’s Price and Value

Biden’s decision to sign the executive order concerning the cryptocurrency trading activities has made a visible impact at this present time. Reporting from Channel News Asia on Thursday, March 10, 2022, the price of Bitcoin rose dramatically to 9.1% after the issuance of the order. This dramatic increase has reached its apotheosis, higher than most peaks made from February 28, and managed to reach US$42,280 or equivalent to IDR 605,978,100. The same thing happened to Ethereum which experienced a price increase of 6.32% to US$ 2,715.47 and also other cryptocurrency assets that experienced price increases simultaneously.

The escalation in the price of cryptocurrency assets will automatically affect their value. With a significant increase in cryptocurrency prices, these digital assets will gain a strong reputation in the community as a high-potential commodity. As a result, people will grow attentiveness gradually in the activity of trading cryptocurrency assets. Investors and other related parties who are actively involved in cryptocurrency trading activity are the ones who will gain the most advantage, concerning their possibly thriving incomes in the future.

2. Maximizing Protection and Risk Mitigation

Through the executive order issued, Biden directly urged the Financial Stability Supervisory Board to identify the financial risks that may occur in cryptocurrency trading activities and consider the risk mitigations to minimize the occurrence of dangers. Supervision of digital currency transactional activities will also be enforced in order to create a space for safer trading activities so that all consumers, investors, and other parties involved can have more convenience in conducting transactions. The agency also got directed to minimize the occurrence of embezzlement and laundering of funds with crypto assets by irresponsible parties. Enforcing regulations for future transactions will protect customers and crypto investors from fraudsters and cyber-attackers who can cause them to lose large amounts of assets.

3. Promoting Technological Growth in Financial Matters

In this all digitally driven era, the US Government strives to continue carrying out innovations on digital technology in various sectors to a greater extent, specifically in the financial sector. The existence of digital currencies signifies the advancement in technology destined for the financial sector. By conducting further research on cryptocurrency trading, the US Government has made a prodigious milestone to develop the financial sector’s supporting technologies. The US government is expected to have the capability to establish a digital trading environment that escalates the country’s competitive values in order to compete with other first-world countries and be capable of becoming a pioneer in digital asset trading technology.

The development of technology in the financial sector by the US Government is also crucial for security and convenience enhancements in cryptocurrency transactional activities in the digital realm. Blockchain technology is a perfect epitome of technological upgrades, which have the capability to store transactional data that are unalterable and customizable for public visibility. With the existence of blockchain, the reprobates who often embezzle their financials through digital currencies will have to think twice when carrying out their maneuvers. Consequently, cases of embezzlement and fraud in digital transactions may be drastically reduced.

Beside the positive impacts, there are potential challenges for the development of cryptocurrency in the US to be faced in the future. In formulating policies that regulate the digitalized currencies' transactional traffic, the US Government is expected to think about all challenges that have possible occurrences in the future. One of them is social inequality that can be caused by digital currency transactions in the present time and in the future. In an executive order by Biden, equality of access and easy financial services at affordable prices is one of the discourses that they aspire to be realized, despite being contradictory to the skyrocketing price of cryptocurrencies. The high price of some digital currencies, such as Bitcoin, also makes it inaccessible to people from the lower middle class and makes it only accessible to the upper-middle class. This will concerningly form a perception between the rich and the poor in the community, where people will perceive that only the riches can have the access to cryptocurrency and could happen otherwise.

In addition, another upcoming challenge is the security of the personal data of users of the digital asset trading platform that are vulnerable to numerous risks. According to Epiq Discovery, trading activities in the digital realm require users' personal data inputs so that transactional activities can run smoothly. Moreover, blockchains can be concerning as they have records of all traces of users’ transactions alongside their personal data. Their nature that can be visible to the public can put the personal data of users at risk of being leaked at any time. Furthermore, the risk of data theft in the blockchain by hackers is still possible even though there are claims that the blockchain system is very difficult to hack. Therefore, the security of personal data and privacy must be guaranteed by the government after the policy is formulated.