As cryptocurrency continues to soar in popularity and social notice, cryptocurrency oversight has become a flashpoint of discussion.
- KEYPOINT 1
- KEYPOINT 2
- KEYPOINT 3
Cryptocurrency Without Rules
Not exactly the Wild West, there are still very few rules governing cryptocurrency – which may seem surprising given how much money the government might stand to make on transactions. Many crypto investors actively campaign against regulation, as it could limit the amount of freedom in the crypto realm.
The IRS considers cryptocurrency as property for retirement accounts, such as a a Self-Directed IRA. But the SEC, as early as 2019, began considering cryptocurrency and how it should be managed on a government oversight level. Some of the confusion can stem from differing comprehension of what cryptocurrency even is.
History of Cryptocurrency
It may seem counterintuitive to some to utilize a new form of currency, but the trust that makes the whole Bitcoin, and cryptocurrency, system work is really the same sort of trust individuals have in national systems as well. Many cite the paperless, anonymous, borderless transaction as more democratic than the national basics of the systems countries currently use.
Relatively new in the currency world, crypto such as Bitcoin and Ethereum are really just digital platforms that are accepted in many areas – even being able to purchase NFTs and digital works of art. The holding of cryptocurrency itself in a retirement account has been accepted by the IRS, although NFT holding is not accepted at this time.
The Biden Administration appears to be taking a broad view of cryptocurrency, and is making an effort to understand the situation and all potentialities. Wanting to regulate it enough that there will not be illegal financing of terrorism is an admirable task, and one that is being considered in upcoming regulation concepts.
The Department of Justice is also involved with cryptocurrency, policing the digital space in an effort to make sure all United States laws are applied properly. While the previous administration was sometimes antagonistic toward cryptocurrency, it’s likely that the Biden administration will be looking to take a more nuanced view, eliminating some abilities to illegally fund terrorist organizations while encouraging American to return to work and financial security.
It’s an interesting turn of events that something considered a fad not too long ago has been raised and elevated to the point that the United State government has taken an interest in it. It certainly shows that cryptocurrency has landed, and its time is now. Many types of cryptocurrency are popular with investors and retirees, some looking to make a quick turn of profit, and others looking to hold long term with the intent to see prices raise ever higher.
What sort of regulations would a Biden administration be willing to enact? It can be difficult to contemplate because there is a general lack of familiarity with cryptocurrency among banker regulators. It would be almost a new industry, and there can be potential problems as nuances are explained and understood.
There seems to be a correlation between the amount of regulation and the price of cryptos, but it is anecdotal at the moment, since no strong regulations have been enacted that could influence determining factors. As a young industry, cryptocurrency will have a large number of potential regulations that could be applied. But it is difficult to really assess what rules would be put into place first.
While former Treasury Secretary Mnuchin had an antagonistic approach to cryptocurrency, current Secretary Yellin may approach the whole industry with a lighter touch. It will be interesting to see what regulations are important enough to be enacted within the new administration’s primary actions, and what is left for Congress to do itself.
Cryptocurrency And The Future
Moving forward, it seems like the Biden administration is looking to fully comprehend the entire crypto situation and will make common-sense legislation based on gathered information.
Vitally important in the possession of Bitcoin, or any cryptocurrency, really, is security. While the coins themselves are anonymous and private, it is possible to lose them, lose access to them or the drive they’re on, or forget the password for the account itself. Maintaining quality records is important in all areas of financial and wealth management.
Cryptocurrency oversight is coming, whether the crypto market wants it or not. In a perfect world, regulations will help protect the American people while also preserving the economic future.