Biden Enters the White House: What Does This Mean for Crypto in the US?

by Rachel McIntosh
  • President-Elect Joseph R. Biden has plans to enact a number of policy changes on day one of his tenure.
Biden Enters the White House: What Does This Mean for Crypto in the US?
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Now that the day of the inauguration of President-elect Joseph R. Biden has arrived, a number of financial and policy analysts are predicting some big policy changes for the financial world over the next four years.

With the rising popularity of Cryptocurrencies and the spread of financial technologies, it seems inevitable that crypto and fintech will be in the crosshairs of US regulators.

Background: What Is the Biden Administration Expected to Do on Day One?

The new administration already has a number of plans toward making policy changes on day one. ABC News reported that starting on the first day of his tenure, Biden will be using “the power of his pen” to enact “a sweeping transformation of U.S. policy through dozens of executive orders, presidential memoranda, and other official directives.”

While many of the immediate executive orders are targeted toward dealing with the national COVID-19 situation, as well as rolling back some of the Trump era restrictions on immigration to the United States.

Therefore, fintech and crypto may not be at the top of the Biden administration’s priority list when it comes to swift action.

However, beyond the first day, the first week, or even the first year in office, the Biden administration is expected to make a number of transformative policy decisions for the United States. After all, while the deadliness of COVID-19 is an imminent problem that must be addressed, the societal effects of the virus will last far beyond the pandemic itself.

A New Financial Paradigm Has Formed over the Last Four Years

In the financial world, COVID has brought a decisive move toward the digitization (or 'fintechization') of everything.

Usage of cash greatly declined in the United States and abroad as quarantine orders were set in place; financial firms that previously provided services in-person were forced to build their digital service offerings even further. Additionally, the US government called upon a number of fintech firms to aid in their distribution of federal aid for individuals and small businesses whose income was negatively affected by COVID.

Moreover, 2020 brought massive amounts of quantitative easing and stimulus programs to the United States and other parts of the world in order to pump adrenaline into COVID-stricken economies. While the full effects of this QE will likely not be felt for some time to come, a number of analysts have warned that widespread inflation is imminent.

Perhaps this is part of the reason why the year of the pandemic was the year that Bitcoin managed to break through its previous all-time high, gaining unprecedented international attention and usage. Further, 2020 was the year of the 'DeFi summer', in which the decentralized financial world made significant progress in its growth and usage.

So, what kinds of regulations could the Biden administration bring to the fintech and crypto space?

Monetary Policy Changes Are Indirectly Boosting Bitcoin and Other Crypto Markets

As far as direct impacts on the cryptocurrency space, one of the Biden administration’s biggest impacts may come from legislation that is not directly related to crypto at all.

Andrew Kiguel, the CEO and Co-Founder of Tokens.com, told Finance Magnates that “Biden has announced a $1.9 trillion stimulus package. A huge driver of bitcoin price and crypto is the fear that the US has printed too much money in response to COVID.”

Andrew Kiguel, the CEO and Co-Founder of Tokens.com.

“In 2020, over 30% of US dollars in circulation were printed,” Kiguel explained. “This proposed stimulus package reinforces this money printing and that more is coming. This will have the impact of moving investors off the US dollar and into alternative areas like bitcoin and gold that hold value better.”

Crypto-Friendly Cabinet Picks?

When it comes to policy decisions that are more directly targeted at crypto and fintech, Andrew Kiguel pointed out that some of Biden’s cabinet picks could be more crypto-friendly than previous members of US presidential administrations.

Gary Gensler was named as Biden’s pick for US Securities and Exchange Commission (SEC) Chairman,” Kiguel said. “He is a Wall Street veteran with deep knowledge of the cryptocurrency space. This could lead to the approval of long-awaited bitcoin ETFs and crypto-friendly regulations.”

“The previous SEC chairman was less friendly to crypto,” he added.

However, there are still some unknowns when it comes to the appointment of important figures in the US financial landscape.

Global multi-asset investment platform, eToro's Market Analyst, Josh Gilbert pointed out to Finance Magnates that “with Biden yet to announce the Chairman for the Federal Reserve, we will need to wait to get a better understanding.”

Global multi-asset investment platform eToro's market analyst Josh Gilbert.

“However, it is likely that Jerome Powell will remain the Federal Chair, and this will likely continue the accommodative monetary policy,” Gilbert said. “This will also coordinate well with the aggressive fiscal policy that is being proposed by Biden Treasury Secretary, Janet Yellen.”

Could We See a “Digital Dollar” Any Time Soon?

Another shift that seems to have been accelerated by COVID-19 is the global movement toward the creation of central bank digital currencies or CBDCs.

In an interview conducted with Finance Magnates earlier this week, CoinShares Investment Strategist, James Butterfill said that: “What we’ve seen during COVID-19 is a massive move toward cashless societies, which has really kickstarted a lot of central banks into think about CBDCs.”

“They’re much more committed to it than they were in the past,” he said, adding that the growing popularity of Bitcoin could be putting some extra pressure on the push toward CBDCs.

CoinShares Investment Strategist James Butterfill.

Indeed, in addition to China (which is now actively testing the digital currency project it launched several years ago), other nations have announced plans to launch digital currencies.

For example, towards the end of 2020, the Bahamas recently became one of the first countries in the world to officially launch a CBDC, which was dubbed the ‘Sand Dollar’; Lebanon’s central bank governor recently said the country is preparing to launch a digital currency in 2021. Additionally, the European Central Bank (ECB) launched a report examining the issuance of a CBDC in October.

“I'm Sure the Biden Administration Will Explore a CBDC.”

Despite all of this, the United States may not be interested in developing a 'digital dollar' anytime soon. The 'digital dollar' concept was briefly mentioned in an early draft of one of the COVID stimulus bills earlier in 2020, but the idea was quickly dropped in favor of shorter-term solutions for stimulus distribution.

Indeed, “it doesn’t seem likely,” said Ankit Bhatia, Co-founder and Chief Executive of Sapien.

Ankit Bhatia, Co-founder and Chief Executive of Sapien, an Ethereum-based social network.

“We’re not seeing any discussions around the CBDCs in Democratic policy circles, and congressional leaders are tightly connected to the banking industry who would probably fight like the devil against anything resembling this,” he told Finance Magnates.

However, others are more hopeful. Anthony Dernier, Chief Executive of commission-free stock Trading Platform , WeBull, told Finance Magnates that “I'm sure the Biden administration will explore a CBDC.”

“The Fed is already conducting research related to distributed ledger technologies and the potential for digital currencies,” he explained.

Moreover, Dernier added that the development of a CBDC or any other monetary policy should not be a partisan effort. “Presidents don't make monetary policy. The Federal Reserve does,” he said. “The Fed's work should be independent of government influence or political pressure.”

“The president proposes and the Congress passes fiscal policy. The main fiscal policy we can expect is the $1.9 trillion stimulus package Biden proposed last week. This package will give a boost to the economy and accelerate the distribution of the Covid vaccines. Now, it's up to the Congress to pass the legislation,” he said.

”What Happens When Cryptocurrency Ceases to Be Apolitical?”

However, as the divisive political drama that developed in the Trump era continues to play out during the Biden era, it seems like anything that was previously considered to be bipartisan is up for political grabs.

Therefore, issues that were previously considered to be largely 'apolitical', embraced by both major parties in the US, could become divisive issues in the future.

Anthony Denier, Chief Executive of commission-free stock trading platform, WeBull.

"The wildcard is, what happens when cryptocurrency ceases to be apolitical?” Wrote Monica Eaton-Cardone in an email to Finance Magnates. Monica is the owner, Co-founder, and Chief Executive of Chargebacks911.

"Washington is as bitterly divided as it's been in generations, but right now, cryptocurrency is mostly an apolitical concept. It just doesn't polarize liberals or galvanize conservatives the way other issues do. And because of this, it might escape political scrutiny.”

“The potential is surely there, since there's an obvious economic-divide between crypto-investors and most middle- and lower-class Americans,” she said. “Not too many poor people, or working-class Moms and Dads, are investing in bitcoins.”

"For Better or Worse, Joe Biden Is a Known Quantity.”

Monica Eaton-Cardone, the owner, Co-founder, and Chief Executive of Chargebacks911.

Indeed, “Millions of Americans are unemployed and suffering, while the tech billionaires like Elon Musk and Jeff Bezos keep getting richer and richer. It just doesn't seem fair, does it? And since a Democratic-controlled White House and Congress will almost certainly seek new revenue streams, the cryptocurrency marketplace could be a very tempting political target."

However, at the same time, Monica pointed out that "for better or worse, Joe Biden is a known quantity.”

“He's held elected office longer than most Americans have been alive, and throughout his entire legislative career, he's never been known as a free-wheeling maverick. In fact, Biden campaigned in 2020 as a consensus-building, middle-of-the-road unifier who'll try to work with both sides.”

“Recent history suggests that unification will be unlikely, however: Presidents Trump, Obama and Bush all failed at fostering bipartisanship, and instead spent enormous political capital to squeak-through a very small number of legislative achievements,” she said. “Since the turn of the century, US Presidents have won by playing political hardball, not by reaching across the aisle.”

Now that the day of the inauguration of President-elect Joseph R. Biden has arrived, a number of financial and policy analysts are predicting some big policy changes for the financial world over the next four years.

With the rising popularity of Cryptocurrencies and the spread of financial technologies, it seems inevitable that crypto and fintech will be in the crosshairs of US regulators.

Background: What Is the Biden Administration Expected to Do on Day One?

The new administration already has a number of plans toward making policy changes on day one. ABC News reported that starting on the first day of his tenure, Biden will be using “the power of his pen” to enact “a sweeping transformation of U.S. policy through dozens of executive orders, presidential memoranda, and other official directives.”

While many of the immediate executive orders are targeted toward dealing with the national COVID-19 situation, as well as rolling back some of the Trump era restrictions on immigration to the United States.

Therefore, fintech and crypto may not be at the top of the Biden administration’s priority list when it comes to swift action.

However, beyond the first day, the first week, or even the first year in office, the Biden administration is expected to make a number of transformative policy decisions for the United States. After all, while the deadliness of COVID-19 is an imminent problem that must be addressed, the societal effects of the virus will last far beyond the pandemic itself.

A New Financial Paradigm Has Formed over the Last Four Years

In the financial world, COVID has brought a decisive move toward the digitization (or 'fintechization') of everything.

Usage of cash greatly declined in the United States and abroad as quarantine orders were set in place; financial firms that previously provided services in-person were forced to build their digital service offerings even further. Additionally, the US government called upon a number of fintech firms to aid in their distribution of federal aid for individuals and small businesses whose income was negatively affected by COVID.

Moreover, 2020 brought massive amounts of quantitative easing and stimulus programs to the United States and other parts of the world in order to pump adrenaline into COVID-stricken economies. While the full effects of this QE will likely not be felt for some time to come, a number of analysts have warned that widespread inflation is imminent.

Perhaps this is part of the reason why the year of the pandemic was the year that Bitcoin managed to break through its previous all-time high, gaining unprecedented international attention and usage. Further, 2020 was the year of the 'DeFi summer', in which the decentralized financial world made significant progress in its growth and usage.

So, what kinds of regulations could the Biden administration bring to the fintech and crypto space?

Monetary Policy Changes Are Indirectly Boosting Bitcoin and Other Crypto Markets

As far as direct impacts on the cryptocurrency space, one of the Biden administration’s biggest impacts may come from legislation that is not directly related to crypto at all.

Andrew Kiguel, the CEO and Co-Founder of Tokens.com, told Finance Magnates that “Biden has announced a $1.9 trillion stimulus package. A huge driver of bitcoin price and crypto is the fear that the US has printed too much money in response to COVID.”

Andrew Kiguel, the CEO and Co-Founder of Tokens.com.

“In 2020, over 30% of US dollars in circulation were printed,” Kiguel explained. “This proposed stimulus package reinforces this money printing and that more is coming. This will have the impact of moving investors off the US dollar and into alternative areas like bitcoin and gold that hold value better.”

Crypto-Friendly Cabinet Picks?

When it comes to policy decisions that are more directly targeted at crypto and fintech, Andrew Kiguel pointed out that some of Biden’s cabinet picks could be more crypto-friendly than previous members of US presidential administrations.

Gary Gensler was named as Biden’s pick for US Securities and Exchange Commission (SEC) Chairman,” Kiguel said. “He is a Wall Street veteran with deep knowledge of the cryptocurrency space. This could lead to the approval of long-awaited bitcoin ETFs and crypto-friendly regulations.”

“The previous SEC chairman was less friendly to crypto,” he added.

However, there are still some unknowns when it comes to the appointment of important figures in the US financial landscape.

Global multi-asset investment platform, eToro's Market Analyst, Josh Gilbert pointed out to Finance Magnates that “with Biden yet to announce the Chairman for the Federal Reserve, we will need to wait to get a better understanding.”

Global multi-asset investment platform eToro's market analyst Josh Gilbert.

“However, it is likely that Jerome Powell will remain the Federal Chair, and this will likely continue the accommodative monetary policy,” Gilbert said. “This will also coordinate well with the aggressive fiscal policy that is being proposed by Biden Treasury Secretary, Janet Yellen.”

Could We See a “Digital Dollar” Any Time Soon?

Another shift that seems to have been accelerated by COVID-19 is the global movement toward the creation of central bank digital currencies or CBDCs.

In an interview conducted with Finance Magnates earlier this week, CoinShares Investment Strategist, James Butterfill said that: “What we’ve seen during COVID-19 is a massive move toward cashless societies, which has really kickstarted a lot of central banks into think about CBDCs.”

“They’re much more committed to it than they were in the past,” he said, adding that the growing popularity of Bitcoin could be putting some extra pressure on the push toward CBDCs.

CoinShares Investment Strategist James Butterfill.

Indeed, in addition to China (which is now actively testing the digital currency project it launched several years ago), other nations have announced plans to launch digital currencies.

For example, towards the end of 2020, the Bahamas recently became one of the first countries in the world to officially launch a CBDC, which was dubbed the ‘Sand Dollar’; Lebanon’s central bank governor recently said the country is preparing to launch a digital currency in 2021. Additionally, the European Central Bank (ECB) launched a report examining the issuance of a CBDC in October.

“I'm Sure the Biden Administration Will Explore a CBDC.”

Despite all of this, the United States may not be interested in developing a 'digital dollar' anytime soon. The 'digital dollar' concept was briefly mentioned in an early draft of one of the COVID stimulus bills earlier in 2020, but the idea was quickly dropped in favor of shorter-term solutions for stimulus distribution.

Indeed, “it doesn’t seem likely,” said Ankit Bhatia, Co-founder and Chief Executive of Sapien.

Ankit Bhatia, Co-founder and Chief Executive of Sapien, an Ethereum-based social network.

“We’re not seeing any discussions around the CBDCs in Democratic policy circles, and congressional leaders are tightly connected to the banking industry who would probably fight like the devil against anything resembling this,” he told Finance Magnates.

However, others are more hopeful. Anthony Dernier, Chief Executive of commission-free stock Trading Platform , WeBull, told Finance Magnates that “I'm sure the Biden administration will explore a CBDC.”

“The Fed is already conducting research related to distributed ledger technologies and the potential for digital currencies,” he explained.

Moreover, Dernier added that the development of a CBDC or any other monetary policy should not be a partisan effort. “Presidents don't make monetary policy. The Federal Reserve does,” he said. “The Fed's work should be independent of government influence or political pressure.”

“The president proposes and the Congress passes fiscal policy. The main fiscal policy we can expect is the $1.9 trillion stimulus package Biden proposed last week. This package will give a boost to the economy and accelerate the distribution of the Covid vaccines. Now, it's up to the Congress to pass the legislation,” he said.

”What Happens When Cryptocurrency Ceases to Be Apolitical?”

However, as the divisive political drama that developed in the Trump era continues to play out during the Biden era, it seems like anything that was previously considered to be bipartisan is up for political grabs.

Therefore, issues that were previously considered to be largely 'apolitical', embraced by both major parties in the US, could become divisive issues in the future.

Anthony Denier, Chief Executive of commission-free stock trading platform, WeBull.

"The wildcard is, what happens when cryptocurrency ceases to be apolitical?” Wrote Monica Eaton-Cardone in an email to Finance Magnates. Monica is the owner, Co-founder, and Chief Executive of Chargebacks911.

"Washington is as bitterly divided as it's been in generations, but right now, cryptocurrency is mostly an apolitical concept. It just doesn't polarize liberals or galvanize conservatives the way other issues do. And because of this, it might escape political scrutiny.”

“The potential is surely there, since there's an obvious economic-divide between crypto-investors and most middle- and lower-class Americans,” she said. “Not too many poor people, or working-class Moms and Dads, are investing in bitcoins.”

"For Better or Worse, Joe Biden Is a Known Quantity.”

Monica Eaton-Cardone, the owner, Co-founder, and Chief Executive of Chargebacks911.

Indeed, “Millions of Americans are unemployed and suffering, while the tech billionaires like Elon Musk and Jeff Bezos keep getting richer and richer. It just doesn't seem fair, does it? And since a Democratic-controlled White House and Congress will almost certainly seek new revenue streams, the cryptocurrency marketplace could be a very tempting political target."

However, at the same time, Monica pointed out that "for better or worse, Joe Biden is a known quantity.”

“He's held elected office longer than most Americans have been alive, and throughout his entire legislative career, he's never been known as a free-wheeling maverick. In fact, Biden campaigned in 2020 as a consensus-building, middle-of-the-road unifier who'll try to work with both sides.”

“Recent history suggests that unification will be unlikely, however: Presidents Trump, Obama and Bush all failed at fostering bipartisanship, and instead spent enormous political capital to squeak-through a very small number of legislative achievements,” she said. “Since the turn of the century, US Presidents have won by playing political hardball, not by reaching across the aisle.”

About the Author: Rachel McIntosh
Rachel McIntosh
  • 1509 Articles
  • 52 Followers
About the Author: Rachel McIntosh
Rachel is a self-taught crypto geek and a passionate writer. She believes in the power that the written word has to educate, connect and empower individuals to make positive and powerful financial choices. She is the Podcast Host and a Cryptocurrency Editor at Finance Magnates.
  • 1509 Articles
  • 52 Followers

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