Former US President Donald Trump was outspoken in his views, and so too did he voice his opinion on crypto saying he was “not a fan.” But now there’s been a change of guard, and it seems that newly elected President Joe Biden has a more favorable stance towards cryptocurrencies.
In reality, we don’t have much direct evidence to understand his position on crypto, but we can certainly deduct a general direction from his cabinet picks to see what we should expect under the new administration.
Two important Biden’s cabinet picks that may affect crypto
One of the first key economic positions filled by Biden was Treasury Secretary, with Biden picking former Federal Reserve Chair Janet Yellen as his nominee. She has since been confirmed by the Senate to hold the seat, and for those following the crypto space it may be a familiar name. She is known for her dismissive stance on crypto saying they are highly speculative assets.
During her confirmation hearing in January 2021, she expressed concerns for the role crypto plays in facilitating criminal activities. She said: “I think many of them are used, at least in a transaction sense, mainly for illicit financing. We really need to examine ways in which we can curtail their use, and make sure that money laundering does not occur through those channels.”
Other picks in Biden’s cabinet offer a more nuanced stance on crypto, most notably his pick for heading the SEC Gary Gensler who is the former chairman of the Commodity Futures Trading Commission under Obama. Not only is Gensler an ex-Goldman Sachs banker turned financial regulator, he also teaches digital currencies at MIT Sloane School of Management.
He is knowledgeable about the laws and regulations surrounding crypto and being familiar with blockchain technologies he should be able to put the right team together that will be willing to work together with the crypto industry to advance progressive policies. In a recent CoinDesk article written by Gensler , he described Bitcoin as a catalyst for change, while highlighting the need for greater regulatory frameworks to underpin the operations of exchanges and reduce market manipulation, frauds, and hacks.
If anything, at least Gensler will be able to provide a more insightful approach towards crypto rather than dismissing the entire asset class altogether because of ‘money laundering risks’. Major global banks probably know a thing or two about money laundering as you can read here, here, here, and here.
Trials and regulations
There is currently no information available about any new regulations being put into place to better manage the crypto industry. We do know that Democrats tend to be more protective of end-users, limiting market innovation when the effects it may have on citizens is unclear.
It wasn’t that long ago that Rep. Maxine Waters requested Facebook to pause the development of Libra until Congress could better understand the implications of a stablecoin issued by the world’s largest social network that sells data for a living. Alexandria Ocasio-Cortez has also spoken against corporate controlled currencies and showed favor for money managed by a central authority. In December 2020, three Democratic Representatives announced the Stablecoin Tethering and Bank Licensing Enforcement (STABLE) Act which would require stablecoin issuers to have a banking charter and obtain regulatory approved from financial regulators.
While these are all examples related to stablecoins, it does provide some insight into the stance a Biden administration might take towards the crypto industry as a whole. Because freedom is an intrinsic element of cryptocurrencies and their usage, and because the industry is still young and growing, there are likely to be many more regulations covering cryptocurrencies and their usage in the future.
Is it just more of the same? Yes and no. The struggle between crypto advocates and skeptics continues as usual, even at the highest levels of government. But appointees such as Gary Gensler with a solid understanding of crypto and blockchain show we are making progress. It would have been unimaginable even 5 years ago.
But we must remember these are still early days. We need to be ready for the changes that will eventually come, even if we don’t want them, and find ways to make it work without losing sight of the mission, without limiting equal access, and without giving away self-determination.