As Joe Biden comes into power as the 46th President of the United States of America, one of the probable biggest questions that the new administration has to answer is what the future of Bitcoin and other cryptocurrencies holds in the country. Joe Biden’s presidential term officially came into power on 20th January 2021.
As the Democratic Party takes control over both legislative bodies of the U.S. Congress, Biden hints towards a positive and a solid outlook for cryptocurrencies, jolting the community on his very first day in the office.
According to the recent reports, the Democrats froze all the new or pending rules in the Trump-era, including the Bank Secrecy Act, which was a previously proposed rule in December 2020. The proposed rule requires banks and money services organizations to submit reports and verify the identity of customers while engaging in private cryptocurrency wallets.
Joe Biden’s federal office will shape crypto policy in the country for years to come. Given the new leadership entering the U.S. Securities and Exchange Commission (SEC), Commodity Futures Trading Commission (CFTC), and Office of the Comptroller of the Currency (OCC), crypto space can finally witness solidarity and clarity in the market.
Earlier this week at the MIT Technology Review Business of Blockchain event Gary Gensler said, “...It seems, in essence, this is the core to the plumbing of the financial sector. To reach its potential though, and for public confidence, blockchain technology has to be compliant with laws.” He further added that consumer protection, investor protection, and market integrity are the main aspects of the financial sector, and to "really work I believe blockchain technology needs to come within that public policy framework."
With Biden announcing the former CFTC Chair Gary Gensler to head the SEC, along with the rumors of appointing the former Ripple board member Michael S. Barr as the head of the OCC, the crypto community will finally have leaders with experience in crypto. However, there are no comments on the story from the White House. Apart from this, Chris Brummer, who runs the annual D.C. Fintech Week conference, also might be the next chair at CFTC. Brummer recently testified about cryptocurrencies and central bank digital currencies before the CFTC. With these three holding the top positions of important financial sectors, the expectations are high for more solid grounds for decentralization and financial digitization. This also gives high hopes to Ripple, which faced a serious lawsuit from the SEC recently under the Trump administration.
At the present times, Bitcoin is directly regulated at the federal level by the Office of the Comptroller of the Currency (OCC) with regards to its custody, and the U.S. Commodity Futures Trading Commission (CFTC) under the Commodity Exchange Act (CEA). It is essential to know that a few years back CFTC has confirmed that bitcoin and other digital currencies are commodities covered by the Commodity Exchange Act (CEA).
Now note, that currently there is an intersection with the IRS on tax policy. Here, the transparency rules on disclosure and the classification as the property mean cryptocurrency investors have to pay federal capital gains tax. Exchanges of cryptocurrencies and bitcoin may come under the Bank Secrecy Act and its registration/disclosure requirements.
Recently, Niall Ferguson, a British economic and financial historian, said the Biden should amalgamate Bitcoin into the mainstream U.S. financial system. He mentioned that the U.S. should find its own way of adopting cryptocurrencies instead of “building [its] own versions of China’s electronic payments systems.”
The former U.S. President wanted to hold the economic stimulus until the election. Now that Joe Biden has taken over the President’s seat, people have greater expectations that the economic stimulus will push through. And experts say that this stimulus spending will have a great effect on the price of Bitcoin. This U.S. fiscal stimulus has sparked fears of dollar sell-offs. Therefore, investors will think that it is safe to invest their money in Bitcoin. This will push Bitcoin’s momentum further upwards.
Perhaps, the most direct way Biden can affect Bitcoin and other cryptocurrencies are by having a more clear set of laws and regulations, designed by the mercy of those with good knowledge of cryptocurrencies as the heads of important financial institutions. For the time being, it does look like that the cryptocurrencies are making their way only forward and upwards. Moreover, the recent Bloomberg crypto newsletter mentioned,
“A potential Joe Biden presidency should shine favor on further appreciation in the price of Bitcoin, in our view. New leadership may change the hands-off policy of the Trump administration — to the detriment of the broader crypto market — and nudge the firstborn benchmark toward the mainstream, improving chances for an ETF.”