Biden's Executive Order on Crypto
What it actually means for crypto, and what we read between the lines
President Biden Signs Executive Order on Crypto
US President Joe Biden signed an Executive Order on Wednesday addressing cryptocurrency, and it’s the first of its kind. A few main takeaways from the EO:
Federal agencies have been directed to coordinate their efforts and share information.
The Treasury Department is to create a report on the “future of money,” and include research about how the current financial system might not meet consumer needs.*
*that’s going to be a long report
There are six “key priorities” laid out in the EO, including protecting U.S. interests, protecting global financial stability, preventing illicit uses, promoting “responsible innovation,” financial inclusion, and U.S. leadership.
The order was surprisingly well-received by the crypto community, who saw it mainly as an attempt to better understand crypto. The official White House FACT sheet states:
“The Administration will continue work across agencies and with Congress to establish policies that guard against risks and guide responsible innovation, with our allies and partners to develop aligned international capabilities that respond to national security risks, and with the private sector to study and support technological advances in digital assets.”
Jerry Brito of Coin Center said:
However some parts of the EO are worth taking note of with a more skeptical eye. Yellen said (in a mistakenly-published response to the EO, that appeared a day prior to the EO itself, and was promptly take down):
“Because the questions raised by digital assets often have important cross-border dimensions, we’ll work with our international partners to promote robust standards and a level playing field.”
Crypto already has a level playing field, there is no coercion involved, there are no barriers to entry created by licensing boards or regulatory bodies, and the technology is neutral. When politicians use the term “level playing field” they usually mean that they plan to intervene to serve their own interests. Further, “promote robust standards” with our “international partners” usually means dictate policy for the globe.
As we often remind, the long arm of the US law reaches far and wide, and ‘global standards’ are about to be set.
A Warning About FinCEN’s Warning
FinCEN (Financial Crimes Enforcement Network) has issued a warning to US-based financial institutions, saying that Russia may be hiding under the shadow of crypto as a way to evade sanctions.
At the end the notice, FinCEN said that it:
“strongly encourages all financial institutions to make full use of their ability to share information consistent with Section 314(b)5 of the USA PATRIOT Act, and consider how the use of innovative tools and solutions may assist in identifying hidden Russian and Belarusian assets”.
Many a politician has been known to say “never let a good crisis go to waste”, and in the wake of the devastating situation happening in Ukraine, we have seen many such politicians and regulators clamoring for increased surveillance in the name of “national security”.
The bonds of compassion can easily be manipulated by those who have a prior agenda lying in wait. Indeed FinCEN acting director, Him Das, could not confirm any allegations of Russians using crypto to evade sanctions:
“Although we have not seen widespread evasion of our sanctions using methods such as cryptocurrency, prompt reporting of suspicious activity contributes to our national security and our efforts to support Ukraine and its people”.
It’s good to remember that this increased monitoring and reporting affects all of us. Mass crypto surveillance is here, and self-custodying privacy coins has never looked so good.
Can You Take Me Higher?
US inflation has now reached a staggering 7.9%, a new 40-year high. In what feels like a reverse-lotto jackpot that no one wants to win, tensions and consumer prices have risen on virtually everything.
This is the fastest the CPI has risen since 1982, and in February alone it rose 0.8%, compared to January’s 0.6%. There has been a 6.6% rise of gas prices in February alone. The food-at-home index is up 8.6% in the past year, and beef is up 16% over the same period, with these constituting the largest yearly increase since 1981.
Bitcoin continues to be considered a risk on asset, with economic and geopolitical turmoil across the globe leading people to want to take on less risks and potentially avoid such markets. Bitcoin has held steady at around $39,000 since the latest CPI release.
Not investment advice, but diversification of one’s portfolio is considered a good idea in times of inflation and economic uncertainty, and many would argue that if you’re not in crypto you’re missing out on some of that diversification.
THORChain’s Mjolnir Moment
THORChain’s native RUNE token enjoyed a mighty 53% rise in value this week after the announcement of the activation of synthetic assets on its network, and of the launch date for a bunch of new features called “THORfi.”
THORchain is a cross-chain, decentralized exchange, that allows you to swap any asset with any other asset, regardless of chain, without the need for a trusted 3rd party. The orders are paired with liquidity pools rather than someone else on the other side of an order book, and are a permissionless way to swap currencies. It’s also a great way for people to earn interest on their crypto, by providing liquidity to these pools. The RUNE token is the fuel of this ecosystem, but users don’t even need to know that RUNE is being used under the hood — a user can just sell their bitcoin and receive ethereum without realizing that RUNE was involved, or stake their BTC and receive BTC interest directly.
Now THORchain has just integrated synthetic crypto assets into their network (synthetic crypto assets are assets that track the price movements of other assets, but don’t require that a user to hold this other asset itself). RUNE core developer, Chad Barraford, said:
“Trading with synthetics on THORChain has half the swap fees, making swaps cheaper, cheap gas fees, and faster for traders. You can do near-instant trades at a high volume.”
Barraford told NBTV:
“The THORFi design is a major breakthrough in DeFi, redefining what the industry thought was possible:
A new lending protocol that can have a near 100% LTV (loan-to-value ratio), 0% interest, and no liquidations, ever.
An interest account earning yield on a single asset (ie earn Layer 1 BTC on your Layer1 BTC) while maintaining single asset exposure.
Meanwhile, providing these DeFi primitives to any chain and ecosystem in crypto — from EVM chains like Ethereum, to Cosmos chains like Terra, to UTXO chains like Bitcoin.”
They also recently announced the coming integration of Terra into their network, which is progressing well.
To learn more about THORchain, check out our explainer video and interview with Chad Barraford.
Our decentralized future is here, and it keeps getting more exciting!
Andre Cronje and Anton Nell Break Crypto Hearts
DeFi pioneer Andre Cronje and long time associate Anton Nell are exiting the DeFi crypto-sphere. In an announcement on Twitter, Anton spoke for both he and Andre and explained that this was not simply a “rage quit”:
Andre and Anton have been the brains behind such popular financial tools such as Yearn Finance, Solidly, Chainlist, Keep3r Network and Multichain. While the farewell note advised that the websites associated with all these projects will be shut down on April 3rd 2022, these are just front ends for decentralized networks that can continue to operate without the pair’s involvement. Already other teams are stepping up and announcing they will be forking the source code of some of these DeFi tools.
Despite the decentralized nature of these projects, the announcement has predictably affected the market and the associated tokens have already lost considerable value due to many trying to get out while they can. This collective disappointment shows just how important leadership in the decentralized space is, and how fragile even seemingly solid projects can be without the confidence of a trusted developer behind them.
All the best Andre and Anton!
By Will Sandoval, NBTV Associate Producer, and Naomi Brockwell.
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