Biden and Crypto
Will Joe Biden's Administration Be Good For Cryptocurrencies?
Outgoing U.S President Donald Trump once stated that he does not like Bitcoin or any other cryptocurrency for that matter, suggesting that he is not in favor of digital currencies. Many saw this as a sign that Trump would not pursue any policies that would support the crypto industry's growth.
Interestingly, the cryptocurrency and blockchain industry experienced tremendous growth during Trump's reign as president. Experts speculate that it might grow even more during an administration that supports cryptocurrencies, thus the need to understand how Biden's administration will likely affect the industry.
Many industries take up an interest in political matters, especially for the presidency, because governments influence policies, and it is policies that determine how well the industries perform. For example, the cannabis industry became legal in the past few years, but the Federal government has not yet recognized it by delisting cannabis from the schedule 1 category.
Banks cannot do business with cannabis companies because it is still illegal under federal law despite legalization in many states. The lack of legalization forced cannabis companies to adopt cryptocurrencies. In a way, the cryptocurrency industry benefited from that situation. Unlike Trump, Biden did not mention anything about the cryptocurrency industry during his campaigns, but some experts believe that his policies might favor digital currencies.
Will Biden push for pro-cryptocurrency policies?
Cryptocurrencies have so far enjoyed growth due to policies that alienate people from the traditional finance system. For example, digital currencies are not illegal. They are also decentralized, making them appealing for transactions where the traditional banking system would not be involved or instances where people need more control of their finances. This is why the cryptocurrency industry has grown indirectly. However, policies that would bring cryptocurrencies into the mainstream would likely encourage even more growth as mainstream adoption would balloon.
To have policies that favor digital currencies, Biden needs an administration that understands cryptocurrencies and will actively push for such policies. Interestingly, Biden picked former Goldman Sachs banker Gary Gensler to join the government transition team. Gensler teaches about cryptocurrencies and blockchain at MIT Sloan School of Management.
Gensler's position in Biden's transition to power might be critical for the cryptocurrency and blockchain industry because his position would encourage legislators to pass policies that favor digital currencies. Many lawmakers do not understand digital currencies and having someone that can impart knowledge about this industry might be a significant step towards going mainstream.
Favorable policies would encourage the traditional finance system to adopt digital currencies, and major industries such as banking and retail would follow suit. If that were to happen, companies like Amazon and banking institutions would accept crypto payments. There is only one problem. The president alone cannot influence the direction of the industry as far as mainstream adoption is concerned. The Senate would have to be on board, and this is why it is an uphill battle.
Cryptocurrencies will likely come out on top regardless of leadership and policies
Bitcoin and other cryptocurrencies only needed to reach critical mass for the digital currency market to not only survive and thrive. They achieved this feat a long time ago and have become so popular that more people adopt them every year. However, they are yet to break into the mainstream, and one of the potential ways to achieve that is through policies that favor digital currencies. However, that is not the only way in which they can go mainstream.
Cryptocurrencies have so far achieved impressive milestones without needing regulatory support, largely thanks to the fact that they are decentralized. Technically most people use cryptocurrencies to overcome some of the inconveniences presented by the traditional finance system. For example, It is significantly easier and faster to send money to anyone across the globe through crypto as long as they have a digital wallet.
Many companies and small-scale businesses cannot easily access financial services. Cannabis companies can use cryptocurrencies for easier transactions that allow them to expand their networks. Concepts such as DeFi or Decentralized Finance aim to provide crypto-based services such as banking, securities, loans, and insurance, among others, to companies that need such services in the crypto space. A classic case of supply arising where there is demand. Such services are slowly bringing cryptocurrencies into the mainstream. In other words, the companies do not necessarily need support from government policies, thanks to their decentralized nature.
Blockchain and cryptocurrencies are unstoppable
Bitcoin founder Satoshi Nakamoto's goal was to facilitate a new type of economy free of government control. If the cryptocurrency market maintains the focus on Satoshi's goal, where future developments in the industry are built from the ground up, projects like DeFi make a lot of sense.
Cryptocurrencies have so far shown that they are an unstoppable force, while blockchain technology's immutable capabilities and rapid speeds make it appealing to many traditional segments. For example, some major banks such as the Royal Bank of Canada and Goldman Sachs have adopted blockchain to deliver faster and more secure services.
Remittance is one of the industries that stand to benefit the most from blockchain technology. Blockchain enables peer-to-peer payments, which means people can send money directly to their friends, family members, or even employees without involving a third party or without lengthy delays. Traditional services operated by banks are usually slow and costly.
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