U.S. President Joe Biden signing a crypto executive order is more bark than bite.
It doesn’t mean that anything really will happen, especially in the short term.
Optics are quite important for the current American administration, and I believe this is another instance.
Throw the crypto fanatics a bone and hype it up like a transformational moment when it’s not.
If you live in a world of hard outcomes, then this isn’t one of them.
Granted, it’s a step in the right direction, but no meaningful legislation has been enacted yet and I highly doubt that anything concrete gets done before the next administration.
I won’t get into the business of hyping up this announcement of “establishing a framework” for the digital gold because it echoes the direction they were supposed to go with big tech.
Big tech was supposed to get regulated to the utmost, but nothing ever came of it.
The only tech firm that blew up was Meta or Facebook (FB), but that was more about self-inflicted wounds than anything else.
Big tech is largely unscathed from the historical behavior, and nothing has changed in terms of the handling of personal data and its integrity.
Turning a blind eye than rather dealing with issues has been sort of the consensus for anything really controversial with big business.
I don’t believe the administration will lift a finger and plan to treat crypto as politicking even to please optics.
This will create a situation where they can straddle positions on both sides so they can claim innocence if something goes wrong with crypto or take the credit if crypto develops.
The reports will dish up buzz words like “historic” and “unprecedented.”
The order was finally signed Wednesday. It calls on federal agencies to take a unified approach to regulation and oversight of digital assets, according to a White House fact sheet.
A unified approach could also mean that nobody does anything together so we will need to see more substance out of Washington.
The Biden administration is calling on the Treasury to assess and develop policy recommendations on crypto.
Even if recommendations can be decided upon, it doesn’t mean that it will be net positive for Bitcoin’s price.
Last month, U.S. officials seized $3.6 billion worth of bitcoin — their biggest seizure of cryptocurrencies ever — related to the 2016 hack of crypto exchange Bitfinex.
Following Russia’s invasion of Ukraine, authorities are now also concerned about the possible use of crypto in helping sanctioned Russian individuals and companies evade the restrictions.
There is illegal activity that the government wants to stamp out and writing the rules makes it easier to do that.
The Biden administration also wants to explore a digital version of the dollar which is copying the Chinese playbook.
Much of the policy is strategizing relative to what China and Russia are doing and he fell short of saying that the US will create a digital dollar.
Again, it’s more of the optics of saying the government need “urgency” on research and development of a potential digital dollar which doesn’t really mean anything.
The Federal Reserve last year began work on exploring the potential issuance of a digital dollar. The central bank released a long-awaited report detailing the pros and cons of such virtual money but didn’t take a position yet on whether it thinks the U.S. should issue one.
These announcements are a far cry from real policy moves.
It’s great that more resources will be thrown at the asset class but research and urgency don’t mean much in terms of hard victories.
Short-term, this Eastern European crisis has been a massive shot across the bow for Bitcoin fanatics because it has proven that during a possible nuclear war, nobody will buy Bitcoin.
After the dead cat bounce, there was another draconian sell-off this morning in Bitcoin with the asset down 7%, again, diving below $40,000.
The bad price action was created by the 7.9% CPI print and Bitcoin was supposed to be an inflation hedge, but the price action suggests it performs poorly as an inflation hedge.
The jury is out but Bitcoin has failed some major tests this year and it will be a hard slog for the rest of the year.
Sell the rallies until the backdrop and variables change for the better.
