September 25, 2022

GWSM-Tech

Digitally Yours

Biden’s order to set up regulations for cryptocurrency sparks a reaction in the payments industry.

The fast rise of the global cryptocurrency industry has seen the U.S. federal executive branch move to set up the groundwork for regulating these digital assets. This sudden move, incorporated by President Joe Biden in an executive order signed in March 2022, has mixed reactions. Some payments trade groups have applauded the move, while other stakeholders feel the government should consider preserving a competitive landscape for cryptocurrency transactions.

Why regulate Crypto?

The directive, titled “Ensuring Responsible Development of Digital Assets,” comes as several startups and established payment firms begin to offer crypto-based transaction processing, digital-asset exchanges develop and mature, and the Federal Reserve and other government officials consider the possibility of a digital currency issued by the U.S. central bank.

Therefore, the U.S. federal government is looking to regulate crypto to mitigate the explosive growth of these digital assets and prevent market manipulation since crypto prices and trading fluctuate quite quickly.

How long is the Executive Order?

The Executive Order has a six-month timeline and mandates various federal departments to research cryptocurrencies and the concept of a U.S. CBDC. The effort is intended to serve as the foundation for a government-wide policy regulating crypto assets. 

ETA members are leaders in the payments and cryptocurrency fields and are looking forward to continuing to collaborate with policymakers as rules take shape. The Electronic Transaction Association (ETA) is a trade organization established in Washington, D.C., representing over 500 payment-technology suppliers, processors, and other payment enterprises worldwide. This organization also hopes the government will incorporate its expertise in the regulation phase.

How cryptocurrencies affect trade:

Estimates vary. While increasing in number, crypto transactions still account for a small part of the total digital-payment activity. Major payment providers like PayPal Holdings Inc., Block Inc., Visa Inc., and Mastercard Inc. are introducing programs to facilitate Bitcoin and other cryptocurrency transactions. For example, PayPal and Block digital wallet users can buy, store, and spend blockchain-based assets, albeit merchants nearly always get fiat dollars.

What is CBDCS?

The government’s Central Bank Digital Currencies (CBDC) are electronic tokens representing a country’s fiat currency. As the name implies, they are issued by the nation’s central bank and must be backed by reserves. According to The Atlantic Council, a Washington, D.C.-based think tank, about 90 countries are researching the technology, with nine having established a CBDC.

Conclusion

Cryptocurrencies are having a profound impact on global trade. However, because they are relatively new to the global market, the federal government in the United States and other countries worldwide are doing everything to understand and contain this global fad.

Author bio

 Payment industry guru Taylor Cole is a passionate payments expert who understands the complex world of crypto exchange U.K. He also writes non-fiction on subjects ranging from personal finance to stocks to crypto pay. He enjoys eating pies with ice cream on his backyard porch, as should all right-thinking people.