Detailed explanation of President Biden’s executive order: not a decree but super powerful


1. The executive order itself is not a law, but as long as it does not conflict with existing laws, it actually has similar legal effect

2. She will greatly influence the attitude of other countries around the world towards digital assets and the historical process of supervision

3. The difficulty of implementing sanctions against Russia is an external factor that prompted the executive order

4. The U.S. Treasury’s focus is on central bank digital currencies

5. It is definitely good for the industry, especially for compliance business

Content source: Bit Ask column (YouTube account HuobiTech)

Dialogue: Li Hui, Dean of Huobi Research Institute

The full text is as follows:

Moderator: Welcome to Bit Ask, digital currency investment is not easy, but we will make it easy for you. Join us to ask questions and learn from industry leaders and experts.

On March 9, US time, President Biden signed an executive order on crypto assets. The digital asset industry, including digital currency, has exploded in recent years, with the market value exceeding 3 trillion in November last year, compared with 14 billion five years ago. The survey shows that 16% of Americans have more than 40 million people who have participated in digital currency investment, trading or use. The development of the digital asset industry creates opportunities for the financial system and technology, but also challenges for investor protection, financial stability, national security, and climate change. The executive order is not a new bill, it requires federal agencies to prepare and submit detailed reports within 90-180 days, based on their input.

As soon as this executive order came out, Bitcoin rose in response, and the market obviously regarded it as a positive news. We can cite Faryar Shirzad, chief policy officer at Coinbase, who said: “The White House seems to understand and embrace the transformative potential of digital asset technology and the importance of maintaining U.S. leadership.”

Is this executive order really bullish for the digital asset industry? As investors, what should we expect from the report in 90-180 days, and where the market is going?

Moderator: Welcome to today’s guest, Li Hui Flora. Li Hui is the president of Huobi Research Institute and an expert in the cryptocurrency industry. She entered the cryptocurrency industry in 2018. He has been working in the field of fintech before, and has also played key roles in various related organizations and associations. Fortunately, she and her team are also working on this topic today, so let’s start today’s show.

Moderator: The topic we are going to discuss today is the Presidential Executive Order on digital assets signed by US President Biden. We have shared the background and knowledge of this executive order earlier. We have prepared many topics. We hope that through your opinions, you can give us advice on the impact on this market and on the industry. So to start, let me ask a quick question. Whether in our daily news or in movies, we often see important moments when the president of the United States will come forward and sign an important executive order in person. And in such a figurative digital asset field, the president has summoned so many departments to arrange such a job. This is the first time in our industry. Can you explain the significance of this event to the digital asset industry for us at the beginning?

Li Hui: First of all, it is very certain that the signing of this executive order is of great significance and can be said to be a milestone event in history. We can understand it in two ways. First of all, in nature, an executive order signed by the president is an order issued by the president directly to the federal government or state government agencies and related departments. It is not directed at individual citizens, or at other entities.

Another point is that it is not a law in itself, but as long as the executive order does not conflict with existing laws, it actually has similar legal effect . From this dimension, its level is very high. Moreover, its scope of influence directly affects various organs and administrative departments, so its influence is very strong.

From the perspective of industry development, the United States has actually been deeply involved in digital currency, or she has been deeply involved in the field of digital assets. At present, the leading companies in this industry are basically companies with American background, such as our common Coinbase, FTX, DCG Group, etc. These are all American companies. The United States is the number one country in this industry. Coupled with the long-arm jurisdiction of the United States, it will greatly affect the attitudes of other countries around the world towards digital assets, as well as the entire regulatory history.

On the whole, this time is the highest level in the United States, and it is also the first time that the president has come forward to formulate very comprehensive policy supervision and make future industry development layout . Although we did not see specific policies and programs in this order, it pointed out the direction and planning. It is an instructive, programmatic policy document. This is also an important signal for comprehensive supervision of the digital asset or cryptocurrency field.

Moderator: I extracted the keywords you just mentioned. There are many “firsts”, the highest level, and even the nature of the law. Given the head influence of American companies in digital assets, their jurisdiction will profoundly affect the global development of the industry. The second question I want to ask is that, in fact, it is only a framework for guiding the direction, not a formal written regulation. In the next 90-180 days, many departments will go home to do their homework and submit them back to the president’s office. We also know that last year there was a series of hearings in the United States, including the House of Representatives. We found that there are both positive and negative voices. We don’t know in the end, according to your prediction or judgment, whether there will be a stronger regulation that will lead to more constraints in this industry, or what kind of situation?

Li Hui: This is a very good question, and it is probably the one that everyone is most concerned about at the moment. To answer this question, we can answer the purpose and background of this order. The purpose and background of this executive order are two-fold. On the one hand, it is very clear that she just wants to encourage the healthy development of the digital asset industry, promote her positive influence, and maintain the U.S.’s dominance and absolute leadership in this industry .

The second aspect is to control risks, strengthen supervision, and prevent digital assets from becoming channels and channels for illegal and criminal activities. In particular, anti-money laundering, cybercrime, terrorist financing, including international sanctions on which the United States is most concerned. In my opinion, one of the important factors driving this order is the impact of the current situation in Russia and Ukraine. The Western world has imposed comprehensive sanctions on Russia. In the traditional financial field, it is actually relatively easy to control, and many of them can be grasped by Western countries. However, the current supervision in the field of digital assets or cryptocurrencies is in a blank state, and there are many things that they cannot control and cannot control. Including the SEC recently sent a letter to 8 digital currency exchanges, asking them to stop serving Russia. But those exchanges are not under the SEC’s jurisdiction, and there are no clear laws and regulations requiring them to cooperate with her actions. At this level, the United States is relatively passive, which also contributed to the implementation of this executive order .

Also, I think a comprehensive regulatory policy is definitely a plus for the industry. In the short term, it may hurt individual players in the industry who eat policy dividends. But in the long run, it will encourage more people and more funds to participate in this industry. The United States currently has a very high level of participation in the cryptocurrency field. There are now 40 million people in the United States investing or trading in the cryptocurrency field using cryptocurrencies, accounting for about 16% of the U.S. population. And the United States is also the country that has received the most crypto financing. Last year, it received $14.1 billion in investment, accounting for 56% of the total investment in the crypto industry, and more than half of it occurred in the United States. From this dimension, future policies will still focus on encouraging and preventing risks.

At present, the attitude towards cryptocurrencies in the United States is actually relatively friendly. Last December, for example, there was a hearing that was attended by executives from major cryptocurrency companies. The main purpose of the hearing is for the industry leaders to tell U.S. government officials what the industry is like? What opportunities does she have and what can she bring to America? What risks and challenges exist? She is more about listening than negative opinions.

The other is that the SEC approved a bitcoin futures ETF last year. After many years, it was finally approved, which is also a big step for the industry. The current SEC chairman, who is very knowledgeable about cryptocurrencies, used to teach courses on cryptocurrencies at MIT. He is very clear about this industry, and he knows how to supervise this industry, rather than restricting the development of this industry. Therefore, from the overall situation, we still have to have a positive attitude towards the final implementation of the policy.

Moderator: You mentioned the SEC many times just now, including the CFTC involved in bitcoin futures, which are all familiar to us. But this report is more interesting. The president has sent a lot of work, and the US Treasury has become the department with the most tasks. Will the US Treasury play a more important role in the digital asset industry in the future? Or are there other important departments that we have neglected before and need to pay attention to?

Li Hui: This executive order is about digital assets, of which a very important piece is CBDC. It’s not purely for the cryptocurrency business. The importance of CBDC is not on the same level as cryptocurrencies. CBDC is the legal currency of the central bank, and its level is very high. Cryptocurrency is just an industry, a subdivision direction. The Treasury Department is involved in this order because she wants to devote her energy and attention to the top-level design of the CBDC, including her issuance, taxation, payment, and potential financial risks .

We paid attention to the SEC, the CFTC before, and more focused on whether the bitcoin futures ETF has been approved? Does an item qualify as a security? More of a discussion at a specific business level. When it comes to industry business, it is more for the SEC and CFTC to consider, but when it comes to CBDC national legal digital currency, it must be dominated by higher-level institutions. Follow-up work with the Ministry of Finance, more like the Office of the Comptroller of the Currency, the Financial Crimes Enforcement Bureau, the Internal Revenue Service and other departments.

Huobi Research Institute will also release a research report in response to this executive order. We will have a very detailed analysis of what each department is concerned about and what to supervise . Interested friends can pay attention to this report released by us.

Moderator: Let’s go back to this market. When the news of this order came out, we noticed that there was a rise in the market. How do you see the impact of this executive order on the market going forward?

Li Hui: There are many factors that affect the market. The financial level, the policy level, the current situation, including the impact of US stocks, actually have a very deep impact on cryptocurrencies. We can judge it badly in the long run and in the short run. The Presidential Executive Order is good for regulation. It means that more talents and a lot of funds will be introduced , so we are still optimistic about the entire track and industry for a long time. This is also the most emerging and rising industry in the world, with huge industry dividends. In the long run, everyone can hold relevant assets stably and wait for the outbreak of the industry.

On the other hand, we can be optimistic about the development of licensed institutions. Although it may be more restrictive to carry out business with relevant licenses now, and it is not very convenient to carry out business, but holding a license can occupy higher industry barriers earlier, and will have more first-mover advantages than other institutions. For example, Huobi Technology currently holds the No. 4 and No. 9 licenses issued by the Hong Kong Securities Regulatory Commission through its subsidiaries, and is also applying for No. 1 and No. 7 licenses, and has also deployed a very diverse range of cryptocurrency fund products. , is a listed company with a leading business and a license in the current industry. This type of organization can be focused on.

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