Summary: Financial updates and political bills can feel confusing at the best of times. Combine the two and you’re in for a lot of head-scratching. We break down what the new executive order on cryptocurrency actually covers, how it affects you, and what it means for your internet plan.
Need a little refresher?
Cryptocurrency, often referred to as crypto, is a digital payment system that doesn’t rely on banks to verify transactions. In fact, any crypto is a currency that only exists digitally or virtually. Instead of using banks to verify transactions, most currencies use blockchain technology, a tamper-resistant record of transactions and ownership.
But while cryptocurrency may have been the thing only your tech-addicted friend cared about a few years ago, it’s now front and forward on just about everyone’s mind. In fact, the value of digital assets and cryptocurrencies is $14 billion higher than it was in 2017.
What is the New Cryptocurrency Executive Order About?
In Spring 2022, President Biden signed an executive order about cryptocurrency. While the order doesn’t lay out a step-by-step guide, the White House did include calls to action in seven specific areas:
- Protect U.S. consumers, investors, and businesses in collaboration with the Department of the Treasury
- Protect U.S. and global financial stability and mitigate systemic risk in collaboration with the Financial Stability Oversight Council
- Mitigate the illicit finance and national security risks posed by the illicit use of digital assets in collaboration with all relevant government agencies
- Promote U.S. leadership in technology, economic competitiveness, and leadership in the global financial system in collaboration with the Department of Commerce
- Promote equitable access to safe and affordable financial services in collaboration with the Secretary of the Treasury
- Support technological advances and ensure responsible development and use of digital assets, including responsible development and implementation while prioritizing privacy and reducing negative climate impacts
- Explore a U.S. Central Bank Digital Currency (CBDC) through prioritization of research and development on this topic
Whew! That’s a lot to unpack — but that’s because while cryptocurrency has gained a lot of traction over the last few years, its full potential is still untapped. Getting in front of the potential benefits and downfalls is important.
Let’s break it down further.
Protecting Consumers and Investors
Most of us fall into one or both of these categories — and some of us are business owners, too! One of the big goals for this order is to reduce (or remove) the potential for investors to fall for crypto scams or have their money lost through cyberattacks. That’s where the Treasury comes in: assessing and developing policy recommendations on cryptocurrency to help safeguard against any systemic risks. Of course, no form of currency is immune to the changes that happen in the overall economy, but this should help put protections in place that currently don’t exist.
But these guardrails will take some time to construct. If you’re looking to invest in the meantime, make sure you fully understand what type of cryptocurrency is best for you (there are thousands available, from Bitcoin to Dogecoin and everything in between), what to expect from the market, and if you’re comfortable with the general volatility (Bitcoin has plunged 30% in value in a single day). Just like your financial advisor asks about your level of comfort with stock market investing, it’s something you’ll need to consider if you opt into crypto.
Protecting Financial Stability
The Financial Stability Oversight Committee is working to provide a report that analyzes the risks for each type of digital asset. It’s also looking at the possibility of a stablecoin, which aims to offer more price stability and be backed by a reserve asset (in other words, it would be digital, but its value would function more like paper money).
This also relates back to the volatility of cryptocurrency. A more protected, stable approach could increase the buy-in and feasibility of expanding the use of crypto.
Mitigating Illicit Finance and National Security Risks
Blockchain is relatively difficult to hack because it’s decentralized. The information is stored across multiple locations, all of which are verified by current users. Still, breaches do happen. In 2022, U.S. officials seized more than $3 billion in stolen bitcoin that was related to the 2016 hack of Bitfinex (a crypto exchange). Crypto advocates maintain that it’s difficult to money launder using digital currency thanks to the blockchain, but it’s not surprising that the government wants to ensure more oversight as the prevalence of crypto expands.
Promoting Equitable Access
It’s no secret that the internet isn’t as universally accessible as many people think. And since cryptocurrency requires a reliable internet connection, rural internet access is increasingly important. Safe, equitable access is crucial to protect underserved communities, who often already lack sufficient access to financial services. Cryptocurrency, like internet, has the potential to be a great equalizer, but it will take considerable forethought and planning. Plus, as technology continues to progress, it may shift how we access crypto (and banking of all types) moving forward.
Taking Climate Change into Account
More subtly, President Biden also mentioned the amount of energy that it costs to use Bitcoin. This includes the miners that are verifying and adding transactions to earn rewards. Think things like top-of-the-line equipment and server farms. Not only does this require space and physical machines to work, but it also produces a lot of heat. To keep the equipment cooler, anything from fans to industrial-style cooling systems are used, adding to the total amount of energy used on this virtual currency. Oh, and most of the electricity used for all of this requires fossil fuels.
The good news? About 39% of bitcoin’s energy consumption is carbon neutral according to the Cambridge Center of Alternative Finance, and that number could grow thanks to this executive order. Psst — if you’ve been thinking about how tech can help save trees but can also be a drag on natural resources, learn how to hack planned obsolescence and save money in the meantime. Your budget and the planet will thank you.
Explore a Central Virtual Currency
Finally, the administration plans to explore a digital version of the U.S. dollar. It’s important to note that this doesn’t mean one will be created — they’re simply researching the option. A central bank digital currency (also referred to as CBDCs), allows more people to use their phones to make payments and handle their finances. It wouldn’t replace physical money but would be an additional option.
All of that sounds great — but what does it actually mean for you? The executive order alone signals that cryptocurrency is becoming more and more legitimized, and this will help it continue to mature and be more accessible (and potentially even become more stable). All signs point to cryptocurrency being here to stay, so if you’re someone who has written it off in the past, it might be time to dip a toe in the water.
It could also be time to upgrade your internet connection — especially if you’re interested in mining crypto. Commit to an internet provider that’s committed to you. EarthLink has no fiber internet data caps, no credit checks, and the largest network in the U.S. No matter what your investment portfolio looks like, that’s a strategy everyone can get behind. Switch to better home internet today.