Today, cryptocurrency Investors enjoyed a respite from the severe declines of the last three months. As of this writing, major cryptocurrencies like BTC and ETH are approaching double-digit percentage gains on the day. Even DOGE is having its day, up 7.5% at the time of writing. The reason for this wave of positive sentiment is a new executive order signed by US President Biden.
The executive order has not yet been published on the official Federal Register site, but various compelling news sources have reported on the content of the layout tables. A key detail in the executive order is that government departments such as the Treasury Department and the Commerce Department have been asked to assess the benefits and risks of cryptocurrencies.
These government departments have to complete a series of investigations on "the future of money". More specifically, reports say they have been tasked with:
Evaluate the benefits of creating a digital central bank dollar
Assess the risks of creating a digital central bank dollar
Consider the two points above when addressing cryptocurrency consumer protection, financial stability, illicit activity, US competitiveness, financial inclusion, and responsible innovation.
Because the government exists to work for the people, some of the most important things that will be considered have to do with client protection. The crypto market is somewhat of a โwild westโ at the moment, with frequent and multiple reports of hacks scams, robberies โ plus cryptocurrencies are a preferred payment option for illicit goods or services.
On the other hand, if crypto is widely adopted by other countries, organizations, and mainstream users, then the US does not want to close its doors to allow its companies to build innovative products based on the technology. Just think if a country had gotten in the way of credit cards, the internet, or other similar innovations, how it might have hindered their local industries for years.
The above plans and research may sound positive for the cryptocurrency market today, in general, hence the rise in the entire market. However, they could simply be traders increasing positivity to do something about breaking news. There have been three solid months of cryptocurrency downtrend โ has the reason behind this fall from grace disappeared? We don't think so.
BTC and ETH prices skyrocketed ahead of official announcement due to document leak (Image credit: Coindesk)
If one looks a little more closely at the details of the executive order, the US government wants to consider more oversight and regulation than the crypto market has previously seen. Biden would like to see an โunprecedented approach of coordinated actionโ from federal agencies, to help crack down on illicit use of cryptocurrencies, and international collaboration to reduce such problems.
With the Russian invasion of Ukraine in mind, the authorities would also like to ensure that these digital currencies are not an easy escape route for rogue governments, sanctioned entities or individuals.
The US president raised one of the finer points about cryptocurrencies being mined or used: the astronomical use of energy resources, largely due to the work test concept.
We have seen recent estimates linking the daily energy use of the Bitcoin blockchain network as being equivalent to a country like the Netherlands. With the current oil and gas crisis piling financial pressure on consumers, it would not be inconceivable that regions poor in natural resources would decide to put some limits on crypto mining activity. China has already implemented such a policy and has been seen enforce that.
