Is the Crypto ban off the table in the US?

Is the Crypto ban off the table in the US?

US President Biden is now officially examining the pros and cons of cryptocurrencies. That alone triggered a price jump in Bitcoin. What is behind Biden’s decree and the will to advance a digital dollar?

This decree by the US President is a tough one: On Thursday night, Joe Biden ordered a comprehensive investigation into the risks and opportunities of cryptocurrencies and the blockchain technology behind them. Various aspects are put to the test: the protection of consumers and investors, the impact of digital assets on financial stability, but also risks such as criminal transactions with cryptocurrencies or harmful consequences for the climate are to be examined.

The US authorities now have six months to present their conclusions and results. However, the crypto community is already celebrating the presidential decree as a success. This is shown most clearly by the price jumps of digital currencies, which had recently been a bit under the wheel.

Crypto Community Celebrates Biden Decree

Bitcoin alone increased by up to eight percent after the presidential decree became known. Crypto fans like the US investor and YouTuber Anthony Pompliano interpret the decree as a rejection of all crypto opponents. “There have been many critics of blockchain technology who have been claiming for years that the US government would ban this technology or ban its use. Dear friends, every single one of those critics was wrong,” Pompliano said in his recent titled video “USA will not ban Bitcoin!”

Currency expert Sören Hettler from DZ-Bank does not want to go that far with his interpretation of the Biden decree. Especially since the Bitcoin price is already in a downward trend again today. “The central message of the regulation is that people want to take care of cryptocurrencies and that the times of the ‘wild west’ are finally over,” according to the crypto expert. So a clear signal in the direction of regulation, for example, to curb terrorist financing or money laundering with cryptocurrencies.

Breeding ground for innovations

The exaggerated euphoria in the industry from Hettler’s point of view is due to premature praise from US Treasury Secretary Janet Yellen. In a statement on the Treasury Department’s website, she called the Biden decree on dealing with digital currencies historic before it was even published.

For market analyst and blockchain expert Timo Emden, the decree itself sends a strong signal. “The signal: We are preparing the breeding ground for innovations based on crypto that can grow and thrive.” In particular, it is about the technology behind it, the blockchain. A kind of digital, forgery-proof register that is located on different computers, which in turn are networked with each other.

Blockchain offers opportunities for the economy

President Biden’s executive order states, “The United States must maintain technological leadership in this fast-growing space, fostering innovation while mitigating risks to consumers, businesses, the financial system, and the climate.”

So there is far more behind it than Bitcoin and Co., says DZ Bank expert Hettler. “Blockchain also offers opportunities for business. You can connect this technology to machines and, for example, trigger automated payments through so-called ‘smart contracts.”

Digital dollar: declaration of war on China

In the same decree, Biden orders “urgency” to consider whether it is in the national interest to issue CBDC, i.e., a digital dollar. The US Federal Reserve is strongly encouraged to continue its efforts in this area. The government should check whether the technological infrastructure for digital central bank money is in place.

For market analyst Emden, this is a clear challenge to China, where the digital yuan is already more advanced. “This has also been accelerated by the war in Russia and the resulting sanctions. So you are now sitting on hot coals and more or less forced to develop your own digital currency that can at least keep up with the Chinese version.” According to Emden, this is based on the fear that sanctions such as an exclusion from SWIFT could no longer apply in the future if every nation has its own independent digital currency, which it can also use to process payment transactions.

Digital central bank money is not the same as cryptocurrency

The digital dollar from the central bank could also simply be an answer to people’s already changing payment behavior, in which cash is becoming ever smaller and electronic transactions are playing an increasingly important role. “You don’t want to miss the train that’s already running,” is the assessment of financial market analyst Emden.

But DZ-Bank expert Hettler warns of a risk of confusion: “Every cryptocurrency is digital, but not every digital currency is based on blockchain technology.” Blockchain expert Emden adds that Bitcoin, for example, does not necessarily function as a currency but as a supposed store of value and is therefore not seen as possible competition with a central bank currency. According to experts, the so-called cryptocurrency and digital central bank money are two different things.

Read also: The reasons for the Bitcoin crash

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