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Cryptocurrencies Surge After Supportive US Executive Order

Bitcoin
(Image credit: Shutterstock)

Today, cryptocurrency investors enjoyed some respite from the punishing declines trending over the last three months. At the time of writing, major cryptocurrencies like BTC and ETH are approaching double digits percentage gains on the day. Even DOGE is having its day, up 7.5% at the time of writing. The reason for this wave of positive sentiment is a new executive order signed by U.S. President Biden.

The executive order has yet to be published on the official Federal Register site, but various heavyweight news sources have reported on the content of the disposition tables. A key detail in the executive order is that government departments, such as the Treasury Department and the Commerce Department, have been asked to assess the benefits and risks of cryptocurrencies.

These government departments have a number of investigations into "the future of money" to complete. More specifically, reports say they have been tasked to:

  • Assess the benefits of creating a central bank digital dollar
  • Assess the risks of creating a central bank digital dollar
  • Consider the above two points while addressing cryptocurrency consumer protection, financial stability, illicit activity, US competitiveness, financial inclusion and responsible innovation

Because the government exists to work for the people, some of the most important things that will be considered regard customer protection. The crypto market is somewhat like the "wild west" right now, with frequent and multiple reports of hacks, scams, thefts – as well as crypto being a preferred payment choice for illicit goods or services.

On the flipside, if crypto is widely adopted by other countries, mainstream organisations and users, then the US doesn't want to close its doors to allowing its enterprises to build innovative products based on the tech. Just think if a country had stood in the way of credit cards, the internet, or other such innovations – how it might have hobbled its homegrown industries for years.

The above plans and investigations might sound positive for the cryptocurrency market today, on the whole, thus the rise market-wide. However, it could just be traders pumping up the positivity to make something from the breaking news. There has been a solid three months of cryptocurrencies down-trending – has the reason behind this fall from favor now gone? We don't think so.

BTC and ETH pricing jumped ahead of the official announcement due to a document leak (Image credit: Coindesk)

If one looks a bit closer at the executive order details, the US government wants to consider more oversight and regulations than the crypto market has seen previously. Biden would like to see an "unprecedented focus of coordinated action" from federal agencies, to help clamp down on illicit use of cryptocurrencies, and international collaboration to reduce such issues.

With the Russian invasion of Ukraine in mind, authorities would also like to make sure these digital currencies aren't an easy escape route for rogue governments, sanctioned entities or individuals.

One of the finer points about cryptocurrencies being mined or used was raised by the U.S. president – the astronomical use of energy resources, largely due to the proof of work concept.

We have seen recent estimates peg the daily power use of the Bitcoin blockchain network as equivalent to a country like the Netherlands. With the current oil and gas crunch piling financial pressure onto consumers, it wouldn't be inconceivable for natural energy resource-poor regions to decide to put some limits on cryptomining activity. China has already implemented such a policy and has been seen enforcing it.

Mark Tyson
Mark Tyson

Mark Tyson is a Freelance News Writer at Tom's Hardware US. He enjoys covering the full breadth of PC tech; from business and semiconductor design to products approaching the edge of reason.

  • bigdragon
    I find it strange that BTC and ETH would be up so much given that the government is discussing creating a rival currency. I don't see much in terms of government endorsement or promotion of existing cryptocurrencies. Looks like they want to clamp down on the existing crypto options while producing a totally new one. I would expect that to be a threat to BTC and ETH.
    Reply
  • cryoburner
    bigdragon said:
    I find it strange that BTC and ETH would be up so much given that the government is discussing creating a rival currency. I don't see much in terms of government endorsement or promotion of existing cryptocurrencies. Looks like they want to clamp down on the existing crypto options while producing a totally new one. I would expect that to be a threat to BTC and ETH.
    Exactly! It's hilarious that cryptocurrency values would climb when this news seems all about heavily restricting them. The primary draw of cryptocurrencies over other digital payment options is hiding monetary transactions from authorities, which is undoubtedly what these government departments already know going into this. Hardly anyone is using crypto to pay for general goods and services. It's all about money laundering, tax evasion and illicit purchases. And of course, speculative gambling over its arbitrary value.

    It also seems rather convenient that this order comes at a time when people are talking about the potential for Russia to bypass sanctions through crypto, something they would want to make as difficult as possible.

    Add to that the high energy inefficiency of these systems, which the current liberal-controlled administration is likely to frown upon, and crypto looks like a riskier investment than ever.

    I think what these gains really are is big investors trying to momentarily pump up the value to encourage others to toss money in before dumping their investments at the first sign of the big plunge. And their automated trading systems will be sure to get out before smaller investors have a chance to react.
    Reply
  • Blackink
    cryoburner said:
    I think what these gains really are is big investors trying to momentarily pump up the value to encourage others to toss money in before dumping their investments at the first sign of the big plunge. And their automated trading systems will be sure to get out before smaller investors have a chance to react.
    B-I-N-G-O.......!!!
    Reply
  • digitalgriffin
    That US order is not supportive. The US are looking to replace it with their own crypto currency which can be tracked, controlled, and taxed. This means Bitcoin and all the other coins will virtually be worthless. And during an energy shortage, we might do a china and outlaw mining in the USA even on renewable resources. (They are examining energy use also)
    Reply
  • spongiemaster
    digitalgriffin said:
    That US order is not supportive. The US are looking to replace it with their own crypto currency which can be tracked, controlled, and taxed. This means Bitcoin and all the other coins will virtually be worthless. And during an energy shortage, we might do a china and outlaw mining in the USA even on renewable resources. (They are examining energy use also)
    Yes, it is. It means the US gov't is not opposed to the concept of cryptocurrency and that there are no plans to blanketly outlaw it.
    Reply
  • digitalgriffin
    spongiemaster said:
    Yes, it is. It means the US gov't is not opposed to the concept of cryptocurrency and that there are no plans to blanketly outlaw it.

    Okay let me rephrase it then, it will likely come out NON supportive of EXISTING crypto's. Remember what I said, "Government loathes what it can't control" If the US government creates it's own crypto, it will likely put regulations in place to limit other crypto currencies to encourage adoption. They will limit other currencies because of money laundering, illicit goods, tax evasion, and power requirements (environment)

    What do you think will happen to the value of bitcoin/eth if you can't exchange it for greenbacks? I'm personally fine with a gov't based, regulated, and BACKED crypto PROVIDED each transaction is traceable, and has low power requirements not based on POW algorithms.

    At the very least if energy concerns aren't an issue, crypto will be put under such heavy regulations that only banking institutions with a clear trail of money and exchanges will be able to handle it so it can be tracked and taxed appropriately. Thus negating one of key benefits of crypto for many. (Anti-govt regulation) Coinbase and the like would likely not get gov't approval as a banking institution. The regulations they put into law about transactions make it almost impossible to enforce with so many small exchanges.
    Reply
  • spongiemaster
    digitalgriffin said:
    Okay let me rephrase it then, it will likely come out NON supportive of EXISTING crypto's. Remember what I said, "Government loathes what it can't control" If the US government creates it's own crypto, it will likely put regulations in place to limit other crypto currencies to encourage adoption. They will limit other currencies because of money laundering, illicit goods, tax evasion, and power requirements (environment)

    What do you think will happen to the value of bitcoin/eth if you can't exchange it for greenbacks? I'm personally fine with a gov't based, regulated, and BACKED crypto PROVIDED each transaction is traceable, and has low power requirements not based on POW algorithms.

    At the very least if energy concerns aren't an issue, crypto will be put under such heavy regulations that only banking institutions with a clear trail of money and exchanges will be able to handle it so it can be tracked and taxed appropriately. Thus negating one of key benefits of crypto for many. (Anti-govt regulation) Coinbase and the like would likely not get gov't approval as a banking institution. The regulations they put into law about transactions make it almost impossible to enforce with so many small exchanges.
    It took more than 10 years to complete the most recent redesign of the $100 bill. In 2016 it was announced that Harriet Tubman would be on the new $20 bill. As of 2021, Treasury Department doesn't even have a design yet and has said any new security features will take 6 to 10 years to develop and test before they are ready for circulation. If the US Gov't decides to implement its own digital currency, we are years and years away from seeing it. No one is cashing out on Bitcoin because of the announcement of this study.
    Reply