It’s a fact. The March 2022 Executive Order on Ensuring Responsible Development of Digital Assets set the wheels in motion.
I was already alarmed by the tone and direction of this EO due to its extreme bias in doing whatever it takes to mitigate risks. Yet, simultaneously, it brushed off the growth, innovation, and leadership potential of the U.S. in this emerging field.
When that Executive Order came out, I analyzed the frequency of words used, and it was telling. There was an emphasis on Payments/Stability/Risks, and much less importance on Blockchain/Innovation/Crypto.
“Risks” was mentioned 47 times, Payment 30 times, CBDC 34, Cooperate/Coordinate 21, Stability 19. In contrast, Innovation was mentioned 12 times, Stablecoin 6, Cryptocurrency 6, and Blockchain just 4 times.
Sure enough, that edict reverberated across related US government agencies as intended. In the ensuing months, they all focused on identifying, amplifying, and taking enforcement actions towards all risk-related aspects at the expense of promoting innovation and growth of the industry.
Six months later, the White House Released the “First-Ever Comprehensive Framework for Responsible Development of Digital Assets,” bragging about the nine reports that responded to the Executive Order.
What is wrong with this picture is that while we need to fix the negatives, we shouldn’t denigrate the whole blockchain thing…which is what this ill-conceived direction has accomplished.
What is misleading about this “comprehensive framework” is that it started with a good setup:
“The digital assets market has grown significantly in recent years. Millions of people globally, including 16% of adult Americans, have purchased digital assets—which reached a market capitalization of $3 trillion globally last November. Digital assets present potential opportunities to reinforce U.S. leadership in the global financial system and remain at the technological frontier.”U.S. White HOUSE (Sept 2022)
Then it went downhill with: “But they also pose real risks as evidenced by recent events in crypto markets.” The rest of the report focused on the risks. Little to nothing was said about facilitating the enablement of U.S. leadership…and how it can remain at the “technological frontier”.
Essentially, they paid lip service to innovation, growth, and U.S. leadership.
Last month, the Economic Report of the President dedicated 30 pages to the field of cryptocurrency and blockchain, essentially downright bashing it, and concluding that “Crypto Assets Are Not Bringing Any Benefits.”
Another substantial and equally damaging report was just released this week by the U.S. Department of Treasury, Illicit Finance Risk Assessment of Decentralized Finance basically throwing DeFi under the bus, proposing that DeFi protocols should be regulated similarly to financial institutions, and exaggerating risks.
We can’t expect anything good or new to change until there is a change of direction from the White House. The current U.S. Administration has already set the tone and guidance about what they think of crypto, and all U.S. government agencies and regulators are marching to that drumbeat.
Unless a strong Congress can steer us in a different direction, or at the least try to limit the harm that is ongoing, there will be more damaging consequences to the U.S. cryptocurrency and blockchain industry, at least for the next 18 months.