- Biden administration’s recent announcements to affect a crypto entry in Washington.
- Banks require permission before engaging in the crypto activity.
- Supposedly no crypto bill in 2023.
The crypto industry has been knocking at the Washington doors for years; they successfully managed to be looked at through magic eyes. But recent events like the FTX collapse and its after-effects, along with a harsh crypto winter, caused the door to remain closed for the foreseeable future.
Why Washington is so important for Crypto
The city is home to the president and Capitol hill, making it quintessential for the industry to become mainstream. But the Biden administration’s recent announcement might put the pin in the crypto balloon. The authorities at the White House and federal agencies are almost in hibernation trying anything for crypto. They have been giving the cold shoulder to the industry for the last two weeks.
Banks and Crypto
A crypto-friendly bank, Custodia Bank, had been denied strictly over their request to join the Federal Reserve system. Even after the bank delivered everything by the book, it was still blindsided. On a broader level, this rejection can be considered a major blow to an industry that aims to disrupt traditional finance. But it would require direct access to the systems, including Fed’s payment network, sadly it was declined.
This decision should warn every bank hoping to ride the crypto waves. They must now have prior permission to engage in any crypto activity. With current situations, there are rare chances of any bank getting permission anytime soon.
Possibly no crypto bills in 2023
There might not be any crypto bill passing this year, although there have been great efforts for that. The losing side would be the companies who played by the rules, operating closest to paper money. Coinbase and Gemini abide by fiat on-ramps and will suffer. At the same time, companies that live off the books might thrive.
Possible reasons and Impact
In March 2022, the Biden administration called out the agencies to study cryptocurrency, but the outcome suggests that they don’t like it. And if a crackdown comes, the bull might stop, and the bear could take over again.
What’s next for the Crypto Industry?
Even though these steps seem harsh, fact admits that crypto is here to stay. The government is cautiously treading the waters, avoiding any whirlpool or bad current. They are trying to understand all the risks and potential benefits of the technology. The Treasury Department is supposed to come up with pointers for consumer protection and also would be working on a report on the future of money and payment systems, working on the length of cryptocurrency.
The Financial Stability Oversight Council will work on identifying the economy-wide, systemic financial risks crypto poses and offering recommendations to fill regulatory gaps. The Commerce Department is tasked with creating a framework to leverage crypto technologies for reinforcing US leadership in the global financial system. All while the major emphasis is on US CBDC.
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