Anxiety over US cryptocurrency executive order weighs on Bitcoin recovery
Biden White House expected to ask federal agencies for input on digital asset regulation
Bitcoin fell by 3% in less than two hours early on Monday morning, unable to hold its head above the $38,000 benchmark.
At £37,222.90 by 09:45 (GMT), the world’s first and largest cryptocurrency was trading more than 45% below the record high set in November. Although it has risen by 7% in the past week, the prospect of a cryptocurrency-related executive order from United States President Joe Biden has arrested bitcoin’s recovery.
A finalised executive order is expected to be on the US president’s desk in a matter of weeks, outlining the regulatory, economic and national security challenges posed by cryptocurrencies
Although details have yet to be revealed, several federal agencies are expected to be asked for input, with the Financial Stability Oversight Council examining the possible systemic effects of digital assets.
The stratospheric rise of the cryptocurrency market to a record capitalisation of almost $3trn in 2021 prompted increased scrutiny from legislators and regulators. Testifying before Congress in December, leading cryptocurrency executives outlined their openness to regulation and standards providing it did not sabotage the burgeoning sector.
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The market’s rapid slump to $1.6trn (£1.2trn) at the end of January 2022 has only accelerated the push towards tighter regulation.
Speaking to Barron’s, a source with knowledge of the White House’s plan said: “This is designed to look holistically at digital assets and develop a set of policies that give coherency to what the government is trying to do in this space.”
While the exact nature of the Biden administration’s policy is as yet unclear, cryptocurrency investors and traders will be paying close attention to the latest developments.