The Cryptocurrency Revolution and President Biden's Formal Recognition
March 17, 2022
Out of the ashes of the 2008 financial crisis, Bitcoin sprang up like an insurgency, targeting both the unbridled activity of large financial institutions and the monetary policies of governments charged with overseeing them. The goal of the developers and early adopters of cryptocurrency was to unseat a reserve currency (the dollar). After more than a decade of derisive mirth and skepticism over the idea of cryptocurrency, an organically evolving trading market that was capable of producing a swagger of crypto billionaires (overnight, intermittently), and a chaotic U.S. regulatory approach, one certainty has emerged: the financial institutions that were once the targets of the developers and early adopters have moved from being crypto denouncers to becoming crypto advisors and crypto investors.
President Biden’s “Executive Order on Ensuring Responsible Development of Digital Assets” is the administration’s first policy statement on cryptocurrency, a move to coordinate U.S. regulatory oversight of digital assets. Its importance is that it is a formal recognition by the U.S. government that digital assets are not going away, an implicit recognition of the stamp of approval given to cryptocurrency by America’s financial community. It is also, potentially, the first step in taking one critical element of volatility out of cryptocurrency trading, by beginning a process of clearing up the ambiguities and inconsistencies in regulation and enforcement in one of the world’s largest markets. President Biden’s Order did more than address the risks of cryptocurrency, however. It also highlighted the need to protect the path of innovation, which is perhaps why crypto traders breathed a sigh of relief and the market made no sharp moves following the announcement.
Even more significant was the Order’s suggestion that the U.S. government needed to study the benefits of minting its own digital currency (a central bank digital currency, or CBDC)—an idea which even the boldest of Bitcoin’s insurgents could never have predicted in 2009. While the insurgency may have been marginalized for the time being, the revolution is still under way. It just may be that the revolution turned out to be less about an alternative to fiat, and more about digitizing and decentralizing the way that financial transactions are conducted, whether value is ultimately expressed in dollars, shekels, pesos—or something else.