Regulations on Cryptocurrencies


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After its gain in popularity, the Biden administration has started looking into the risks and benefits of cryptocurrency.

The Biden Administration signed an executive order March 8, ordering the government to find the risks and benefits of Cryptocurrencies.  The Biden Administration’s measure wanted to focus on 9 major points: protect US customers, investors and businesses,  protect US and global financial stability and mitigate system risk, mitigate illicit finance and national security risks posed by digital assets, promote U.S. leadership in the global financial system, support technological advances, and explore a US central bank digital currency. 

The US Federal Reserve Chairman Jerome Powell and SEC Chairman Gray Gendsler have both concerns over lack of cryptocurrency regulation according to NY Times. They intend to regulate it by stopping cryptocurrency crime and tax evasion, stablecoin regulation, and the potential for investment vehicles like crypto ETFs and other funds.  With a more mature regulatory regime in place, cryptocurrency and digital assets could be seen as reaching the mainstream, with Bitcoin, Ether (ETH), stablecoins, other cryptocurrencies and non fungible tokens becoming part of more investors’ long-term strategies.   “As much as I like the decentralization and the lack of government [involvement], I am glad that they are paying attention because unfortunately with cryptocurrency, there are a lot of scams,” Kiana Danial, author of “Cryptocurrency Investing for Dummies, said.

Cryptocurrencies were first created in the 1980’s when they were first called cyber currencies. They gained popularity in 2008 because of the introduction of Bitcoin. Nobody knows who really created Bitcoin, except a person or group called Satoshi Nakamoto. 

Since the launch of Bitcoin in 2009, cryptocurrencies have been all the rage. Over the past few years, their popularity has only grown, with more and more people investing in them.  In 2010, Bitcoin was the only cryptocurrency in the market.  At that time, its price was just a few cents. Over the next few years, new digital currencies entered the market, and their prices rose and fell along with Bitcoin.  Today the value of Bitcoin averages around $30,000-$60,000 for one coin. “Bitcoin is a remarkable cryptographic achievement and the ability to create something that is not duplicable in the digital world has enormous value,” Google CEO Eric Schmidt said to The Guardian .

There are many places where Bitcoin is legal, including the United States, Canada, Australia and El Salvador. These countries think that Crypto is a good Financial assistant.  Many countries such as China, Bahrain, Burundi, Cameroon, Central African-Republic, and others have made Bitcoin completely illegal for trading or owning. These countries think bitcoin is bad because of its volatility and decentralized nature. Some also perceive it as a threat to their current monetary systems while being concerned about its use to support illicit activities like drug trafficking, money laundering, and terrorism according to Investopedia.  Bitcoin mining also utilizes a lot of energy reserves to support the functioning of supercomputers.  Other cryptocurrencies utilize much less energy to run their network. “[Virtual Currencies] may hold long-term promise, particularly if the innovations promote a faster, more secure and more efficient payment system,” previous Federal Reserve Chairman Ben Bernanke said.