The global crypto community has mixed feelings about U.S. President Joe Biden’s much-anticipated executive order on digital asset regulation. While many welcomed the administration’s initiative to regulate crypto in a comprehensive way, others were disappointed with a lack of clarity and detail in the order itself.
The first-of-its-kind order directs federal agencies to work together to mitigate the risks of the digital asset sector by looking at issues from consumer protection to potential impact on financial stability. Earlier this week, local industry heavyweights welcomed Biden’s order with some relief because they were expecting broad crackdowns on crypto.
Governments and regulators worldwide are calling for the urgent regulation of digital assets, particularly over heightened concerns that targeted parties in Russia may attempt to evade sanctions through the use of cryptocurrencies. The European Union (EU) and the U.S. have imposed heavy economic sanctions on Russia following its unprovoked invasion of Ukraine.
Meanwhile, India is on the verge of passing a proposal that would levy a 30% tax on any income generated from crypto transactions, and the country has plans to introduce a central bank digital currency (CBDC), or digital rupee, by the end of the year. When it comes to regulating crypto, the world is watching carefully what the U.S. is doing, according to Du Jun, co-founder of Huobi, one of the world’s largest crypto exchanges founded in China and now based in the Seychelles. Biden's executive order is an official acknowledgment of crypto and a step in the right direction for encouraging mass adoption of digital assets, he said.
“We can also expect Biden’s executive order and subsequent regulatory actions to have a global impact. As more countries around the world pass laws to legalize and regulate cryptocurrencies, we can expect to see global adoption rates grow in tandem,” he said in an email to CoinDesk.
Vikas Ahuja, the CEO of the Indian arm of the U.S.-based crypto exchange CrossTower, echoed Jun’s statement, saying regulation that quashes innovation could have significant consequences for the U.S., including missing out an opportunity to capitalize on the expansion of blockchain technology.
Naveen Surya, chairman of India’s Fintech Convergence Council says the order aligns with Indian Prime Minister Narendra Modi's “protective and progressive” stance on crypto. Earlier this year, Modi called for global cooperation in enforcing crypto regulations.
“To fight this, every nation, every global agency needs to have collective and synchronized action,” Modi said at the time.
Charles Tan, the head of marketing at Coinstore, a Singapore-based exchange, said other countries, including Singapore, may be looking at the U.S. for inspiration on financial regulations. That’s why all eyes have been on the Biden administration.
According to Tan, the move towards comprehensive regulatory action will help in “flushing out the bad actors” as more countries jump in.
Sharan Nair, the chief business officer of Indian exchange CoinSwitch, said that, among other things, the order promotes equitable access to financial services and economic competitiveness.
Stefan Berger, a German politician and EU parliamentarian in charge of the MiCA regulatory framework, said it was a good sign the U.S. has chosen the path of innovation as opposed to prohibition. Biden’s order might influence further adoption of innovation-friendly regulation around the world.
“For competitive reasons alone, Europe should get crypto-friendly regulation off the ground and become part of the global crypto family. The fact that Europe is now going to launch MiCA is an important step that the U.S. and other countries around the world will be watching closely," Berger said in a written statement shared with CoinDesk.
Light on details
Industry players outside the U.S. noted that the order was light on details and did not specify any positions the administration wants government agencies to adopt.
“Concrete actions are hardly recognizable but ministries and authorities have been instructed to develop policy recommendations and regulatory measures,” said Philipp Sandner, economist and head of the Frankfurt School Blockchain Center.
Michael Charles Borrelli, chief executive officer at U.K. consulting firm MCBorelli Advisors Limited, called the order a “lighthearted attempt at regulating crypto assets without having substance to address systemic issues in the industry.”
Sandner added that the White House is seeking to clean up the distributed responsibilities across multiple authorities. As things stand, responsibility over crypto assets is spread out across a number of agencies, including the U.S. Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC) and the Internal Revenue Service (IRS). It’s unclear whether or how agency oversight over digital assets may be consolidated.
Some were disappointed by the Biden order. Shivam Thakral, CEO of BuyUcoin, one India’s largest crypto exchanges, suggested the order didn’t go far enough.
“Since U.S. citizens are leading the world in crypto asset adoption, formal regulation is the need of the hour. Clarity on taxation, a monitoring body similar to the SEC will be seen as a good start,” Thakral said. “We’re expecting coordinated efforts to maintain consumer protection and at same time to combat illicit financing issues stemming in crypto.”
A digital dollar
In the order, Biden also called for the urgent study of a CBDC, or digital dollar.
A CBDC is mentioned as a strategic tool for developing the future of the U.S. dollar, Sandner said. He added that with China having launched pilots for testing its own national digital currency, the eCNY, work on a digital dollar will bring significant changes to the dynamics in the world of CBDCs.
“The U.S. is seeking a [higher] profile in the CBDC arena than it currently has. The Executive Order is a very clear call to action,” wrote Nilixa Devlukia, founder of Payments Solved and a member of the digital euro market advisory group to the European Central Bank.
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