Doc's Daily Commentary

Mind Of Mav

What Everyone Is Missing Regarding Biden’s Executive Order

White House officials have said that US President Joe Biden will order government agencies to begin creating a digital US dollar.

The executive order focuses on six priorities for the Biden administration in the digital asset space, including consumer protection, financial stability, illicit finance, economic competitiveness, financial inclusion and innovation.

Government agencies will even begin studying the risks and benefits of the market and looking at ways to tackle criminal activity, like those that use crypto to avoid existing anti-money laundering and economic sanctions framework. For example, the recent sanctions against Russia, when Bitcoin jumped 10% after Treasury imposed new sanctions against the Russian central bank. The movement in the market highlighted how criminals could manipulate the digital world to get around laws.

Biden’s order set a 180-day deadline for a series of reports on “the future of money” and the role that cryptocurrencies will play in the evolving landscape.

“We could see a significant shift in policy in 180 days. This is a reasonable step toward creating a central bank digital currency.”

This could be a massive leap forward for all digital currencies, and it seems that America is following in the footsteps of Nigeria, which launched its own virtual money in October. Around the world, India is planning on launching its digital rupee in 2022 or 2023, and China’s central bank that has launched a pilot version of a wallet app for the digital yuan.

But, let’s stop there and actually read the thing. 

Biden’s Executive Order on crypto read as follows:

Make no mistake, this is essentially the Biden admin telling the US Government to DYOR regarding crypto, rather than treat it with hostility and suspicion. That’s to be celebrated, without question. This is also what I predicted yesterday:

 

As I said yesterday, we would not see anything more than “research crypto” from this EO, but it could have easily been in the context of “research crypto and how we stop criminal activity,” which would open the doors for more heavy-handed policing from alphabet soup agencies like the SEC, who’ve recently been cracking down on US exchanges with lending programs. If this is true: “President Biden’s historic executive order calls for a coordinated and comprehensive approach to digital asset policy. This approach will support responsible innovation that could result in substantial benefits for the nation, consumers, and businesses”, it is huge. This adoption is really good news.

This is why the market responded positively today, and we look forward to the government using this as study how cryptocurrencies might help create avenues for crime. The end result will likely be a study saying people use it to finance crimes — like every other successful currency in existence — and then in the footnotes say it’s easier to use other forms of currency exchange like banks because they’re harder to trace. Classic government shenanigans abound. 

But, that’s where the positive remarks from me end.

I strongly feel that, in the aggregate and contrary to 99% of the reporting today, this news isn’t inherently positive for crypto. As an example of that, ask yourself what do they consider “responsible innovation”?

Sure, they define it in the EO as, “That could result in substantial benefits for the nation, consumers, and business,” but let’s be honest; that is extremely ambiguous. If they, for example, deem a particular cryptocurrency or a large number of them not be beneficial, then what? If they wanted to rule that stablecoins don’t have substantial benefits as they’re obviously inferior to the almighty dollar, they could eliminate all domestic USD competition overnight. 

Color me skeptical but I’m not looking to what the US government cooks up when it comes to crypto.

Speaking of that, let’s cover the last, and truly the most important, part of this executive order:

Anyone celebrating today’s short-term price increase or short-term victory for crypto is not seeing the big picture risk that just became more prominent. 

Let’s make this point clear: the executive order is telling the government to research how to integrate CBDCs into both the legacy centralized finance and decentralized finance landscape, thereby making the Digital Dollar an essential & irreplaceable component of both. And sure, there might be some positive spin on that; the CBDC could always work with the existing cryptos and not against them. The citizens could be allowed to use their crypto of choice but the government will convert other coins to their CBDC and use that internally. Pretty much a government backed stable coin. A potential solution for the crypto crazy volatility.

However, the more likely scenario is that the introduction of a CBDC means the end of physical cash, giving the government absolute power and surveillance over your money. They can cut you off from any other crypto just by pushing a button. They can cancel your purchases and by canceling your money, they can also stop you from ever leaving the US. That is the endgame being presented with today’s executive order, and I hope more people realize the implications on display here.

So, at the end of today, that’s the main goal of this EO: laying the path forward for a CBDC. All the rest is trivial and vague, and not something to stand upon as a definitive guarantee. 

We have to remain vigilant and informed, even if the majority refuses to do so. 

 
 
 
 

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