President-elect Joe Biden has never taken any strong public stance on cryptocurrency policy. (At least, not at press time.)
In fact, the only direct statement that the President-elect has made on cryptocurrencies came on July 15, just one day after a teenage hacker forced the issue. Only July 14th, the teen broke into Biden’s account as well as the accounts of Barack Obama, Elon Musk, and others to ask unsuspecting followers to send him Bitcoins.
“I don’t have Bitcoin, and I’ll never ask you to send me any,” the real Joe Biden tweeted after the incident. “But, if you want to chip in to help make Donald Trump a one-term President, you can do that here.”
I don’t have Bitcoin, and I’ll never ask you to send me any.
But if you want to chip in to help make Donald Trump a one-term President, you can do that here: https://t.co/8XtBjuU5fX
— Joe Biden (@JoeBiden) July 16, 2020
Of course, the link included in the Tweet did not allow donors to contribute BTC, rather, donations were only accepted in dollars.
What Does a Biden Presidency Mean for Crypto In Terms of Policy?
However, while Biden has not had much to say about Bitcoin or other cryptocurrencies in the past, the President-elect will almost definitely be required to speak and make decisions about cryptocurrencies at some point.
After all, other arms of the US government have already begun to move forward with policies that affect the cryptocurrency industry in significant ways.
For example, earlier this year, the United States Office of the Comptroller of the Currency (OCC) stated in an open letter that banks in the country can provide custody services for cryptocurrency holders.
Additionally, the United States Securities and Exchange Commission (SEC) has pursued legal action against a number of different cryptocurrency issuers, a factor that has greatly shifted the legal landscape around crypto. Some US states have also taken decisively positive stances toward crypto, with a number of analysts placing Wyoming at the helm.
Outside of the US, countries and international bodies around the world have shown an increasing interest in the creation of central bank digital currencies, or CBDCs, a factor that could encourage the United States to consider issuing a CBDC to stay technologically competitive. The phrase ‘digital dollar’ even appeared in a few draft bills when the initial COVID-19 stimulus bill was being created.
Other Pieces of the Biden Administration and the US Government More Generally May Be Positive toward Crypto
But, what do we actually know about how President-elect Biden and his administration may treat cryptocurrency?
Ulrik Lykke, Executive Director at cryptocurrency hedge fund, ARK36, told Finance Magnates that “it must be noted that several of Biden’s [likely] advisers are more pro-crypto than was the case for Trump’s cabinet.”
Indeed, CoinDesk reported that Boston Fed director Lael Brainard, who is overseeing digital dollar research, is a top candidate for the U.S. Treasury Department, while Gary Gensler, former Commodity Futures Trading Commission Chairman, is “being considered to be Wall Street’s top cop.”
Additionally, Jackson Mueller, Director of Policy and Government Relations at Securrency, told Finance Magnates that the legislative arms of the US government are “Amidst all the speculation as to what will happen under a Biden Administration and who will sit atop the various federal financial regulatory bodies, it is worth pointing out that the 117th Congress will welcome back several members from both sides of the aisle that have really striven within this past Congress, in particular, to provide legislative support and clarity to the digital asset space.”
“Current membership of the House Financial Services Committee and Senate Banking Committee remain largely intact, as do the membership roles of the Blockchain Caucus, the FinTech Task Force, the FinTech & Payments Caucus, and the Sound Money Caucus,” he continued.
“These are extremely important caucuses that help educate members on both sides of the aisle on developments and initiatives underway in the digital asset space. We look forward to further engagement with these members and educating new members on the continued changes taking place within the financial services ecosystem.”
“Biden Sponsored a Bill That Scared Paul Zimmerman So Much That He Finally Finished the Code for PGP.”
But, when it comes to the President-elect, “Biden himself historically has favored stronger regulation on the digital world,” Ulrik said.
“For the crypto sphere, this could be a double-edged sword. Some might argue that regulation in the space would make it safer for investors to participate. However, it seems that at the current stage, more regulation would also increase the risk of crippling the development in the space, shifting the focus among entrepreneurs from innovation to compliance with the regulations.”
And what is this “stronger regulation on the digital world”?
“It is publicly known that Biden has previously been very outspoken against the use of encryption, a notion that also seems to be shared by the EU Council of Ministers,” Ulrik pointed out to Finance Magnates.
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Indeed, Graeme Moore, head of tokenization at Polymath, pointed out that Biden’s anti-encryption actions in the past may have been good for Bitcoin, in a rather roundabout way.
Indeed, it was in the 1990s when Biden accidentally inspired Phil Zimmerman to create Pretty Good Privacy (PGP). At the time, Biden was chairman of the Judiciary Committee and introduced two bills with strong anti-encryption language: the Comprehensive Counter-Terrorism Act and the Violent Crime Control Act.
Grame explained to Finance Magnates that Phil Zimmerman, “explicitly credits” the first of these two bills “with motivating him to finish the code for PGP to allow anyone to have sufficient cryptographic techniques in messaging over the internet,” Moore said to Finance Magnates.
In other words, Moore said, “Biden sponsored a bill that scared Paul Zimmerman so much that he finally finished the code for PGP, eventually helping Bitcoin to be born.”
“We Should Be Worried about the Lack of Privacy [on Tech Platforms],” Biden Says
Is Biden still so staunchly anti-encryption? The answer is unclear. However, Biden has more recently commented on the necessity for personal data protection regulation and ‘open internet’ policy.
“We should be worried about the lack of privacy [on tech platforms],” and “we should be setting standards, not unlike the Europeans are doing relative to privacy,” he said in a recent New York Times interview.
The 2020 Democratic Platform calls for passing federal data privacy legislation, in particular expanding privacy protections for students. The platform also calls for updating the Electronic Communications Privacy Act (ECPA) to give digital content the same privacy protections as physical content.
The platform also states that “we will recommit the United States to the principles of an open internet… and vigorously oppose efforts to digitally silo off countries and populations from the rest of the world.”
Continued COVID Stimulus Efforts May Be Good for Bitcoin, but Not-So-Good for the World
Beyond digital policy, there are other aspects of Biden’s tenure that will likely have significant indirect effects on cryptocurrency markets.
“It is important to note that macroeconomically, the issue of who will be the next President may not have as great of an impact on crypto as many expect,” Ulrik Lykke told Finance Magnates.
After all, “Biden will likely continue the current administration’s policy of bringing more stimulus to the fragile economy, still suffering as a result of the COVID-19 pandemic.”
A number of analysts have argued that continued stimulus efforts, which are slated to weaken the dollar in the long term, could boost the value of cryptocurrencies.
However, what is good for crypto may not be good for society.
Before the results of the election were called, Celsius Founder and Chief Executive, Alex Mashinsky told Finance Magnates that any way you slice it, continuous government spending is a slippery slope: “a Trump presidency would mean more tax cuts and bigger deficits, while Biden will bring more healthcare and social spending and bigger deficits,” he said.
“Combine either with the Fed continuing to do whatever it takes to keep the safety net under the US economy, and you can see how a mountain of debt, greater than all the debt anyone had in history, will come bearing down on the US dollar.”
Over the long term, this could seriously degrade the Dollar’s position as the world’s most popular currency: “we may be able to hold back the debt for a while, but each passing day we deplete the trust the entire world has in the dollar and soon enough we will be left holding the bag with all these worthless dollars,” Mashinsky explained.
“While this may be good for Bitcoin and crypto, it is not good for democracy and for the world order as we know it.”
Trump Challenges the Election Results
Of course, it is also important to acknowledge that the Biden administration is facing a challenge as it moves into the White House. (You may have heard a little something about it.)
Indeed, Ulrik Lykke, pointed out to Finance Magnates that “Donald Trump has still not conceded the defeat.”
While most analysts agree that the outcome of the election results is unlikely to change, the fact that Trump is refusing to acknowledge election results “means there is an increasing possibility of a lengthy legal battle for the presidency, which Trump could take all the way to the Supreme Court,” Lykke said.
“Should the current president win this legal battle, he could still have a chance of staying in the office. We estimate the possibility of this outcome to be less than 30%…the odds currently favour Joe Biden becoming the 46th president of the US.”
Still, the legal battle that is somewhat likely to precede Biden’s transition into the White House could bring some major volatility to crypto markets. Buckle up, kids, we may be in for a wild ride.