On March 9, 2022 President Joe Biden issued the “Executive Order on Ensuring Responsible Development of Digital Assets”, which called for a broad review of digital assets, including cryptocurrencies. The executive order calls for the government to examine the risks and benefits of cryptocurrency assets.
On March 28, 2022, US Lawmakers introduced the ”Electronic Currency and Secure Hardware Act” (ECASH Act). The bill calls for development of an electronic version of the US dollar. The act is aimed to push forward an version of the dollar that is convenient, easy to use, digital, and promotes economic inclusion for those traditionally financially marginalized, while “maximizing” consumer protection and data privacy. The bill was sponsored by Stephen Lynch, chair of the Fintech Task Force in the House Financial Services Committee. E-cash would be issued by the Treasury Department as opposed to the Fed. Therefore, it would not technically be considered a CBDC, nor built on the blockchain. The concern with CBDC’s is that they will be used as a form of surveillance and limiting individual privacy.
Cynthia Lummis, Wyoming Senator, outlined a new bi-partisan bill “The Responsible Financial Innovation Act” designed to propel Bitcoin innovation in the United States. At the recent Bitcoin 2022 conference in Miami, in a fireside discussion with Marc Santori, stating that she did not believe the US would migrate towards a CBDC, but will adopt a stablecoin-like digital currency that maintains individual privacy.
Project Hamilton — Joint project between Boston Federal Reserve and MIT to research and examine the development of CBDC’s, usability, feasibility, scalability, and utility.
So what do all of these recent developments signify?
What does this mean for the broader crypto industry?
Why is the White House taking a sudden interest now?
What does this signal?
Significant financial, geopolitical, and social crises over the last decade highlight the problems with unsound money, corrupt government regimes, amidst an unstable financial system.
Increasing frequency, severity, and pervasiveness of economic crises
Unstable currencies leading to hyperinflation
Excessive government debts and taxation
Profits privatized in the hands of the few and losses subsidized by the taxpayers
Lack of autonomy and financial control
Lack of privacy
Lack of economic inclusion, access, and opportunity
As a result of an outdated financial infrastructure and system, crypto assets and their markets have seen significant growth in recent years.
However, significant concern in this extremely nascent industry is surrounded by issues such as:
Excessive price volatility
Possible use in criminal and illicit activities
High energy usage for crypto mining and network maintenance, and related environmental risks
Privacy and security
Policy and regulation
The United States government wants to minimize the risks mentioned above without losing the leadership and benefits from this rapidly growing industry.
However, in recent years many companies and entrepreneurs have left the United States for countries such as Singapore, Europe, and Latin America due to lack of regulatory clarity and a clear framework for how to innovate in this space.
Further examples of stifling growth can be seen in recent severe regulatory policies such as banning crypto mining (China), the Canadian government freezing assets of those involved in donating to the truckers peaceful protest, the sanctions levied against Russia, and countless other examples.
The United States capitalized on the internet revolution and as a result Silicon Valley became home to some of the most valuable tech companies in the world (Apple, Meta, Google).
In order to maintain its status as a global powerhouse, promoting innovation and growth in the crypto industry while providing clear regulatory, compliant, legal, and financial safeguards in place is paramount.
The recent regulatory policies introduced by President Biden, Senator Lummis, and Stephen Lynch demonstrate that Capital Hill acknowledges the crypto industry, it’s potential, as well as drawbacks, and asks government agencies to form committees, research cryptocurrencies, and work toward creating a regulatory framework for crypto-asset markets.
This indicates that the United States continues to be open to the existence of crypto, and wants to stay on the forefront of innovation, while providing clear regulatory frameworks in place.
About: Dr. Christopher Loo is a physician who became financially free at the age of 29, and retired early at the age of 38, as a result of making strategic investments after the 2008 financial crisis. A graduate of the MD-PhD program offered jointly through the Baylor College of Medicine and Department of Bioengineering at Rice University, he is the author of “How I Quit My Lucrative Career and Achieved Financial Freedom Using Real Estate”, and is the host of the Financial Freedom for Physicians Podcast. He is a regular contributor to KevinMD and has spoken about the importance of financial literacy for Passive Income MD, the White Coat Investor, Board Vitals, SEAK Non-Clinical Careers, SoMe Docs, Doximity, Medpage Today, FinCon, and other high-profile financial brands geared towards high-income professionals. He is passionate about the role that crypto, fintech, and innovation will play in enabling financial freedom, economic inclusion, access and opportunity for the entire world in the upcoming decades.