Biden Signs Executive Order on Crypto - But What's the Catch?

The crypto industry has accepted Joe Biden's crypto executive order as a gift. We figure out how good the order is, and what's the catch.

US President Joe Biden has signed a crypto executive order on Wednesday, March 9, 2022, directing various departments within the federal government to prepare reports on digital currencies and develop related regulations.

The paper titled “Ensuring the Responsible Development of Digital Currencies” states that cryptocurrencies can threaten economic stability, national security, and the environment, but they also have a number of potential benefits.

According to the executive order, departments will study the possibility of creating a digital version of the dollar, and the Ministry of Justice will think about whether it is necessary to develop new legislation.

US financial regulators have been eyeing cryptocurrencies for a long time, but the White House first became interested in this issue and recognized that cryptocurrencies have advantages that can be used to stimulate innovation and financial inclusion.

What Biden's executive order means for the crypto industry

The crypto market initially accepted the executive order with great enthusiasm. Bitcoin (BTC) has risen in price by 10% in a few hours. However, the euphoria was short-lived. Already today, the main digital currency has returned to the area below $40,000, having lost almost 6% on a daily basis.

But how is this is a positive signal for the industry?

The US authorities have recognized cryptocurrencies as a significant phenomenon and are going to develop them, not prohibit them. This is good news for the industry.

The development of cryptocurrency infrastructure around the world: countries that have not yet begun developing their digital currencies will try to start this process as quickly as possible. Those who are already busy creating digital money and related regulation will accelerate.

The Presidential Decree on Digital Assets is a turning point for the cryptocurrency industry and Web3, the same thing happened to the Internet in the 90s when the government realized its commercial value,” said Jeremy Allair, co-founder and CEO of Circle.

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Merging with the traditional financial system: regulation and legislation will help to integrate cryptocurrencies into all existing structures, including tax, financial, investment. These processes have already been launched in many jurisdictions, however, without the participation of the US financial system, the integration will not reach the global level.

As soon as the crypto industry gets the green light and understands the clear rules of the game, the process of technological innovation will accelerate many times over.

We are very pleased that the Biden administration has recognized the growing importance of the digital asset industry. This executive order is an important step towards building a robust regulatory environment in the United States. Innovation must always go hand in hand with safeguards,” said Sam Bankman-Fried, head of FTX

Mass adoption - the natural result of all previous processes - will make cryptocurrencies part of our daily lives.

At this stage, the US presidential decree does not contain any details. This is just an order for departments to deal with this issue. It says nothing about what position American regulators will ultimately take - stimulating or restrictive. The text of the decree contains many references to the risks and threats associated with cryptocurrencies. Obviously, the government will look for ways to neutralize them.

An old song on the topic let's study everything properly. The decree contains many controversial statements and discussions about how cryptocurrencies are used and how they affect the environment ... but ultimately this decree only applies to agencies under the control of the presidential administration, and the SEC and CFTC are independent bodies ... and they will determine the future crypto markets,” said Meltem Demirors, director of strategy at CoinShares.

Matt Meili, market strategist at Miller Tabak + Co, also notes a significant bias towards tighter regulation.

The presidential decree is rather vague. They still talk a lot about the need for restrictions on this asset class.”

By merging with the traditional financial system, cryptocurrencies will no longer be money “free from the interference and encroachment of the authorities and any third parties.” Freedom is the price to be paid for development and mass adoption.

This is neither good nor bad. It's just the way.

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