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President Joe Biden\u2019s administration is preparing to regulate cryptocurrency. Biden signed an executive order Wednesday directing the federal government to study the impact of cryptocurrencies<\/a> on American consumers, investors and businesses. This broad review of digital assets also explores the creation of a U.S. cryptocurrency, a \u201cdigital dollar.\u201d<\/p>\n Federal agencies will now have months to review and prepare an assessment of these fast-growing digital currencies. According to the White House Fact Sheet<\/a> for the order, the government is looking at these issues, among others:<\/p>\n In addition, the government is examining the issues involved with a digital dollar and what it could mean:<\/p>\n With the total value of all digital currencies near $2 trillion, cryptocurrency is a substantial asset class that has been largely overlooked by U.S. regulators until relatively recently. The first cryptocurrency, Bitcoin, was introduced in 2009.<\/p>\n Major cryptocurrencies<\/a>, including Bitcoin and Ethereum, traded significantly higher on the news.<\/p>\n The move to examine cryptocurrency and consider potential regulations and a larger strategy for them is long overdue. The sector has been volatile and has been full of potential for chicanery, including in one of the purportedly safe crypto classes called stablecoins<\/a>, which the government has already been examining.<\/p>\n \u201cThis executive order is a definitive signal that we will finally get what we know is coming,\u201d says Daniel Strachman, managing partner at A&C Advisors, in Coral Springs, Florida. Strachman says that the industry and investors have been waiting for more than a year on a clear direction from the government.<\/p>\n \u201cIt puts in place the foundation for regulation \u2014 something we all have expected for some time now.\u201d<\/p>\n Experts say that regulation and a longer-term strategy help validate the cryptocurrency sector, at least its good actors and not those interested in engaging in illegal activities.<\/p>\n \u201cThis presidential executive order could kickstart the SEC and other regulatory bodies to put in place regulations for an asset class that is here to stay,\u201d says Strachman. \u201cWith this move to put regulations in place, we are going to have more market participants, increased interest and activity \u2014 which I think is a great thing.\u201d<\/p>\n While increasing regulation validates cryptocurrency, the new executive order also explores the potential for a central bank digital currency, another move that would create further confidence.<\/p>\n As envisioned, such a cryptocurrency is a virtual version of the U.S. dollar. While a digital dollar could validate crypto technology, it could also pose a longer-term threat to private crypto coins such as Bitcoin<\/a> and Ethereum<\/a>, both of whose value derives entirely from speculators\u2019 sentiment. In contrast, a digital dollar would have the backing of the U.S. government.<\/p>\n President Biden\u2019s executive order helps kick off the U.S. government\u2019s serious analysis of cryptocurrency, an assessment that should ultimately lead to laws and regulations that establish a set of ground rules for the industry. Those rules should help create trust and acceptance in these markets, helping them to further develop.<\/p>\n\n
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What the executive order means for crypto trading<\/h2>\n
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