In March 2022, US President Joe Biden signed an executive order directing federal agencies to develop a strategy and national policies to ensure the responsible development of digital assets in the US. The executive order called for a government-wide approach to address risks, harness the potential benefits that arise from digital assets and their underlying technology, and develop new rules for the industry.
The interest in crypto has been on the rise and has attracted the attention of both retail and institutional players. A March 2022 NBC News poll revealed that one in five Americans had invested in or used cryptocurrency. In another survey in June 2022, Bank of America revealed that despite the fall in the value of crypto and digital assets in 2022, 91% of respondents still plan to buy crypto within the next six months. Institutional players are seeking diversification by including digital assets in their portfolios. According to Kraken Intelligence’s Crypto-in-Review 2021 report, one of the biggest developments in the crypto world in the year was the “institutional and corporate adoption” of digital assets.
A notice by the US Treasury Department published on July 8, 2022, invites the American people and crypto market participants to comment on the implications and impact of the mass adoption of digital assets. The comments are to be received on or before Aug 8, 2022. The US Treasury Secretary must submit a report with the feedback and recommendations to the White House in September 2022.
The stakeholders in the cryptocurrency ecosystem must be allowed to participate in formulating regulations that will govern the crypto markets. The crypto markets need regulations to allow innovation and growth while protecting participants from associated risks.
A comparative industry that has grown in leaps and bounds is the mobile money industry. According to the GSM Association, an organization representing the interests of mobile network operators worldwide, the mobile money industry processed US$1 trillion in mobile money transactions in 2021, reflecting a 31% increase year-on-year. In some instances, regulation followed the rapid growth of the mobile money industry, and mobile money operators were placed under the purview of a regulator.
With an industry with the potential to reach a peak global market cap of US$3 trillion (Nov 2021) and in a couple of months have its global market cap dropping to just over US$900 billion (Jul 2022), the crypto industry remains too significant to ignore. Crypto market stakeholders should create an enabling regulatory environment for the industry. The US Treasury’s request for public comments on digital assets’ development provides industry stakeholders this opportunity.