The White House took a big step toward regulating cryptocurrency on Wednesday — a move experts described as “extremely positive,” “long overdue,” and an “acknowledgment that cryptocurrency is here to stay.”
With the signing of a new executive order on cryptocurrency, President Joe Biden officially directed federal agencies to implement a strategy for policies and regulations on digital assets like crypto, according to a White House fact sheet.
“In the long-term, this is extremely positive for the crypto market and is absolutely necessary to allow it to grow further, mature and be more accessible to institutional investors,” says Tal Elyashiv, founder of SPiCE VC, a venture capital fund that focuses on blockchain and tokenization.
Experts say the order will help create a path toward the regulatory clarity needed for mass institutional adoption of Bitcoin and other digital assets. That, in turn, could mean more stability in the notoriously volatile crypto market for long-term investors. After an initial surge that saw the price of Bitcoin and Ethereum surge after the order was announced, both fell back within a matter of hours.
Biden’s order also calls on U.S. agencies to make sure the country’s cryptocurrency laws align with those of U.S. allies, and tasks the Financial Stability Oversight Council to investigate any illicit financial concerns. Additionally, the order puts new urgency on the possibility of a new government-issued central bank digital currency.
We asked six crypto experts what they think about Biden’s executive order, and what investors should make of it. Here’s what they said:
Experts React to Biden’s Executive Order on Crypto
‘A Step in the Right Direction’
Point of View: Cleve Mesidor, public policy advisor at the Blockchain Association
Reaction: “It’s a step in the right direction that the White House is assessing digital assets from the perspective of innovation and competitiveness. Data shows working and middle class Americans that have been locked out of the traditional financial system are leading mainstream adoption of blockchain and cryptocurrency. So we need this government strategy to prioritize greater federal investments in skills training and access to capital to ensure new female investors, Black and Latino entrepreneurs, startup founders, and small businesses in urban and rural communities are empowered to lead and thrive.”
‘Sets Out a Game Plan’
Point of View: Aaron Klein, senior fellow in economic studies at the Brookings Institution
Reaction: “The executive order sets out a game plan for the administration to more holistically consider what to do about digital assets. While many parts of the government were already at work on regulating aspects of crypto, the executive order brings it together and provides insights into how the White House is thinking through the issue. The Treasury Department’s comments the prior day before the Financial Literacy and Education Commission demonstrate the administration’s commitment to increasing consumer understanding, and I suspect eventually increase regulation for consumer protection for cryptocurrency. But that process takes time.”
‘Acknowledgment That Cryptocurrency Is Here to Stay’
Point of View: Charlene Fadirepo, crypto expert and the founder of Guidefi
Reaction: “I think President Biden’s executive order on digital assets presents a thoughtful and comprehensive national approach to cryptocurrency regulation. This order is an acknowledgement that cryptocurrency is here to stay. I was encouraged by the focus on financial inclusion and expanding access to safe and affordable financial services. I hope this focus can continue to support the high cryptocurrency adoption levels among communities of color by addressing the millions of unbanked and underbanked families in this country.”
Point of View: Tal Elyashiv, founder of SPiCE VC
Reaction: “In my opinion, it is long overdue. The U.S. is lagging behind most of the western world in developing a regulatory and legislative framework for blockchain in general and for crypto specifically. There has been significant interest from regulators like the SEC, the Treasury, and the Commodity Futures Trading Commission in regulating the space, but also lack of clarity and understanding of what is in whose jurisdiction to regulate and even how cryptocurrency should be treated. This move can increase pressure on regulators to agree on a common approach, and at least move forward with some regulatory framework.”
‘A Tremendous Relief’
Point of View: Pat White, CEO of Bitwave
Reaction: “It’s a tremendous relief that they are taking a more measured approach and are generally open to digital assets as the cornerstone for the future financial system, as opposed to the naive view that it’s only something criminals use. The executive order triggered a huge run up in the crypto markets for a reason: regulatory clarity on digital assets would be enormously helpful for the industry.”
What Does the Executive Order Mean for Crypto Investors?
Biden’s executive order is a good reminder that U.S. policy makers are paying close attention to crypto and how it could change financial markets in the future. But it shouldn’t steer crypto investors to make any immediate changes to their long-term investment strategies.
In the short term, the move by the administration may create some noise and volatility in the crypto market, says Elyashiv. Bitcoin climbed up 9%, above $40,000, after the White House announced that Biden would sign an executive order on crypto. Ethereum’s price saw an immediate boost as well.
“Markets usually respond this way in face of uncertainty about moves that may be fundamental to the market,” Elyashiv says.
But the fundamentals of cryptocurrency investing remain the same. Experts recommend investing only what you’re OK with losing or no more than 5% of your total portfolio, and sticking to the most established cryptocurrencies, Bitcoin and Ethereum.
You should always prioritize important aspects of your finances, such as saving for emergencies, paying off high-interest debt, and saving for retirement, ahead of cryptocurrency investments. And in terms of where you buy and trade crypto, stick with a mainstream, high-volume cryptocurrency exchange, like Coinbase or Gemini, that proactively complies with federal and state regulators.