President Joe Biden’s executive order on digital asset innovation – directing federal agencies to study the industry and report on regulatory authority – is a major milestone for the industry in the United States.
If you are bullish on the long-term possibilities for cryptocurrencies to transform many of the foundational services of our lives, then this recognition by the federal government of crypto's fundamental importance can only be viewed as an affirmation of that position. The industry welcomes the open dialogue. The debate is no longer whether crypto will survive; the debate has shifted to encouraging responsible innovation and how the U.S. can maintain a leadership position in this innovation.
Kristin Smith is the executive director of the Blockchain Association, the Washington D.C.-based trade association representing the most prominent and reputable organizations in the crypto industry.
A short time ago, policymakers typically viewed crypto with some combination of confusion, derision or apathy. Even just last summer, Congress slapped misguided Internal Revenue Service requirements on crypto entities to raise cash for the infrastructure bill. Now, the president of the United States is publicly saying that the federal government must do its due diligence before moving forward with new regulation.
By directing federal agencies to study crypto, the president is acknowledging the importance of getting the regulation of this space right. Crypto is regulated today by a patchwork of directions from multiple agencies, from the IRS to the Securities and Exchange Commission to the Treasury Department's FinCEN. Some of those guidelines are vague, others are contradictory and many of them fail to adequately set clear and consistent rules that nurture crypto innovation while protecting consumers.
The current regulatory landscape will only cause more challenges for crypto as the industry matures. Entrepreneurs and founders can’t focus on growing their business, creating jobs and providing the best services to consumers if they’re ensnared in uncertainty. That’s why the crypto industry has repeatedly called for an open and productive conversation with government. President Biden’s executive order brings us closer to that goal.
However, an executive order can only go so far. We need the other end of Pennsylvania Avenue – Congress – to examine if legislation is needed. As history proves, this type of action can have enormous benefits for our society.
In the 1990s, a novel technology called the internet was growing fast, and regulators suddenly had to grapple with how to address it. Ultimately, Congress passed legislation that provided clear rules and necessary protections while giving tech companies the breathing room to create better products. If Congress considers the same for crypto as it did for the internet, then we could see a similar explosion of innovation.
That innovation could have an impact on communities. Crypto technology has the power to provide financial services to the unbanked and underbanked, give individuals control over their finances, make data storage secure and private, and so much more.
None of that will be possible without clear rules for the industry.
Crypto is a transformative technology that’s simply too important to leave to a scattershot of regulations, and it’s very encouraging that President Biden recognizes this in his executive order. Now, the rest of the government should follow his lead and help power the crypto boom of the 21st century.