As soon as March, the Biden administration could release its strategy in its effort to regulate Bitcoin and other cryptocurrencies, which the administration reportedly claims may be a national security issue.
According to Bloomberg, “The Biden administration is preparing to release an initial government-wide strategy for digital assets as soon as next month and task federal agencies with assessing the risks and opportunities that they pose,” Bloomberg reported, adding:
The late-stage draft of the executive order details economic, regulatory and national security challenges posed by cryptocurrencies, said the people who asked not to be named discussing internal deliberations. … The administration is also expected to weigh in on the possibility of the U.S. issuing a government-backed coin, known as a central bank digital currency or CBDC, the people familiar with the talks said. But, according to one of the people, the administration is likely to hold off on taking a firm position, as the Federal Reserve is still considering the issue.
“The recently passed bipartisan infrastructure deal requires cryptocurrency brokers — Coinbase, Crypton.com, Gemini, etc. — to disclose the names and addresses of their customers. In order to coerce compliance with tax laws, the bipartisan infrastructure deal also required cryptocurrency brokers to provide the IRS, and each customer, with a Form 1099-B detailing exchanges, withdrawals, and holdings,” The Blaze noted, continuing:
The U.S. government has been preparing to regulate the cryptocurrency market for a while now. Prior to the Biden administration endorsing the idea of regulating crypto, there was a bipartisan coalition in the U.S. Senate pushing for it to be regulated.
Historian Niall Ferguson explained,
You can tell it’s a bear market for crypto because the usual suspects have been tweeting about it. … How much lower could Bitcoin go? It is worth recalling that, after the price of Bitcoin peaked during its first bubble — at $1,137 on Nov. 29, 2013 — it dropped by 84% to $183 just over a year later, on Jan. 14, 2015.
This pattern was repeated four years later, when the price peaked at $19,041 on Dec. 17, 2017, and bottomed out a year later at $3,204 — a cumulative drop of 83%. Were this historical pattern to repeat itself exactly, the price would fall to a low of $11,515 this November, 83% below its peak in November of last year.
However, such a plunge seems unlikely for two reasons. First, Bitcoin is a much larger asset than in the 2010s, with its market cap peaking at just shy of a trillion dollars last year. … Second, while Bitcoin remains a highly speculative investment, it is less speculative than it was a decade ago, based on measures of 30-day volatility and institutional adoption. …
Applying financial history to the future, I expect this crypto winter soon to pass. It will be followed by a spring in which Bitcoin continues its steady advance toward being not just a volatile option on digital gold, but dependable digital gold itself; and DeFi (decentralized finance) defies the skeptics to unleash a financial revolution as transformative as the e-commerce revolution of Web 2.0.