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The White House on Wednesday took a big step toward regulating cryptocurrency — a move experts described as “extremely positive,” “much earlier” and an “acknowledgment that cryptocurrency will stay here.”
With the signing of a new cryptocurrency executive order, President Joe Biden has officially instructed federal agencies to implement a policy and regulation strategy for digital assets such as crypto, according to a White House. fact sheet†
“In the long run, this is extremely positive for the crypto market and absolutely necessary for it to continue to grow, mature and become more accessible to institutional investors,” said Tal Elyashiv, founder of SPiCE VCa venture capital fund focused on blockchain and tokenization.
Experts say the order will help pave the way for 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 soar after the order was announced, both fell back within hours.
Biden’s order also calls on US agencies to ensure that the country’s cryptocurrency laws align with those of US allies, and instructs the Financial Stability Oversight Council to investigate illicit financial concerns. In addition, the order gives new urgency to the possibility of a new government-issued central bank digital currency.
We asked six crypto experts what they think of Biden’s order and what investors should think. This is what they said:
Experts Respond 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
Response: “It is a step in the right direction that the White House is assessing digital assets from the perspective of innovation and competitiveness. Data shows that working and middle class Americans locked out of the traditional financial system are leading the mainstream adoption of blockchain and cryptocurrency. So we need this government strategy to prioritize greater federal investment in skills training and access to capital to ensure that new female investors, black and Hispanic entrepreneurs, startup founders and small businesses in urban and rural communities are empowered to to lead and thrive.
‘Determines a game plan’
Point of view: Aaron Klein, senior fellow in economic studies at the Brookings Institute
Response: “The executive order includes a game plan for the administration to consider more holistically what to do with digital assets. While many parts of the government were already regulating aspects of crypto, the executive order brings it together and gives insight into how the White House feels on the matter. The Treasury Department’s comments to the Financial Literacy and Education Commission last day demonstrate the administration’s commitment to increasing consumer understanding, and I suspect eventually consumer protection regulations for cryptocurrency will increase. But that process takes time.”
‘Recognition that cryptocurrency is here to stay’
Point of view: Charlene Fadirepo, crypto expert and the founder of guidefi
Response: “I think President Biden’s executive order on digital assets represents a thoughtful and comprehensive national approach to cryptocurrency regulation. This order is an acknowledgment that cryptocurrency is here to stay. I was encouraged by the focus on financial inclusion and expanding access to secure and affordable financial services. I hope this focus can continue to support the high cryptocurrency adoption rate among communities of color by addressing the millions of unbanked families in this country.”
‘Long too late’
Point of view: Tal Elyashiv, founder of SPiCE VC
Response: “I think it’s been a long time. The US is lagging behind most of the western world in developing a regulatory and legislative framework for blockchain in general and crypto specifically. There is significant interest from regulators such as the SEC, the Treasury and the Commodity Futures Trading Commission to regulate the space, but also lack of clarity and understanding of what falls under whose jurisdiction and even how cryptocurrency should be treated. This move could increase the pressure on regulators to agree on a common approach, and at the very least make progress on a regulatory framework.”
‘A huge relief’
Point of view: pat white, CEO of bit wave
Response: “It’s a huge relief that they’re taking a more measured approach and generally open to digital assets as the cornerstone of the future financial system, as opposed to the naive view that it’s just something criminals use. The executive order caused a huge run-up in the crypto markets for a reason: clarity about digital assets would be hugely helpful for the industry.
What does the Executive Order mean for crypto investors?
Biden’s executive order is a good reminder that US policymakers are paying close attention to crypto and how it could change financial markets in the future. But it should not prompt crypto investors to make immediate changes to their long-term investment strategies.
In the short term, the move by the administration could cause some noise and volatility in the crypto market, says Elyashiv. Bitcoin climbed 9%, above $40,000, after the White House announced Biden would sign an executive order on crypto. The price of Ethereum also saw an immediate boost.
“Markets usually react this way in the face of uncertainty about moves that could be fundamental to the market,” says Elyashiv.
But the basics of cryptocurrency investing remain the same. Experts recommend investing only what you like and losing 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 emergency savings, paying off high-yield debt, and saving for retirement, before investing in cryptocurrency. And as for where to buy and trade crypto, stick with a mainstream, large-scale cryptocurrency exchange, such as Coinbase or Gemini, that proactively complies with federal and state regulators.