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What the executive order means for crypto trading

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 , which the government has already been examining. “This executive order is a definitive signal that we will finally get what we know is coming,” 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. “It puts in place the foundation for regulation — something we all have expected for some time now.” 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. “This 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,” says Strachman. “With this move to put regulations in place, we are going to have more market participants, increased interest and activity — which I think is a great thing.” 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. 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 and , both of whose value derives entirely from speculators’ sentiment. In contrast, a digital dollar would have the backing of the U.S. government.

Bottom line

President Biden’s executive order helps kick off the U.S. government’s 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.

Learn more

SHARE: Bankrate senior reporter James F. Royal, Ph.D., covers investing and wealth management. His work has been cited by CNBC, the Washington Post, The New York Times and more. Brian Beers is the managing editor for the Wealth team at Bankrate. He oversees editorial coverage of banking, investing, the economy and all things money.

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