President Biden’s Executive Order on Cryptocurrency
- May 2, 2022
- Phil Cannella
- 0 Comments
On March 9th, 2022, President Biden issued the “Executive Order on Ensuring Responsible Development of Digital Assets.” This order outlined multiple objectives related to cryptocurrencies and other digital assets aimed at making them more stable and safer for investors. While this order has not had an immediate lasting impact on the cryptocurrency landscape, it was significant in that it was the first time the federal government officially acknowledged the role of digital assets in the economy. This order could be the first step in legitimizing the cryptocurrency market and expanding its access for all Americans.
At Crash Proof Retirement®, we recognize the importance of finding safe investments, especially for those who are in or near retirement. At present time, we feel cryptocurrencies are far too volatile for retirement phase investors and consider them to be risk assets. We have already seen how global events can affect cryptocurrency prices; even something as simple as a tweet can send their value plummeting. President Biden’s executive order also feeds into a growing debate about the development of a digital United States Dollar, which could also create some unintended consequences. Here is our take on the executive order and what it could mean for retirees now and in the future.
Content of the Executive Order
Highlighting the rapid rise of digital currencies, President Biden’s executive order outlines seven main objectives:
- Protect U.S. Consumers, Investors, and Businesses
- Protect U.S. and Global Financial Stability and Mitigate Systemic Risk
- Mitigate the Illicit Finance and National Security Risks Posed by the Illicit Use of Digital Assets
- Promote U.S. Leadership in Technology and Economic Competitiveness to Reinforce U.S. Leadership in the Global Financial System
- Promote Equitable Access to Safe and Affordable Financial Services
- Support Technological Advances and Ensure Responsible Development and Use of Digital Assets
- Explore a U.S. Central Bank Digital Currency (CBDC)
Up until this point, the development of digital assets has taken place outside the scope of world governments and financial regulators. While several cryptocurrencies have been developed in this environment that have the potential to be viable in the long term, others have proven to be unreliable, worthless, and some have been outright scams. Objectives 1, 2, 5, and 6 are aimed at mitigating risk and promoting accessible education about investing in cryptocurrencies. Objectives 3 and 4 are intended to cement the United States’ position as a leader in digital asset development and ensure that cryptocurrency is not being used to facilitate illegal activities. Objective 7 is perhaps the most significant, as it reinforces the Federal Reserve’s continued research into the creation of a national digital currency.
Pros and Cons of a Central Bank Digital Currency (CBDC)
With the rapid rise of digital assets, more than 100 countries are currently in the process of developing a Central Bank Digital Currency (CBDC). Governments are attracted to CBDCs because, until now, they have enjoyed the exclusive ability to issue currency. Private digital currencies, like bitcoin, cut governments out of the equation and made it difficult for central banks to control money supplies, interest rates, inflation, and more. CBDCs would also be easier for countries to regulate than private digital assets, a fact that could stabilize global digital asset markets. CBDCs could also expand access to the banking system for populations that are currently underserved, and by bypassing the commercial banking system, money transfers could be conducted without fees.
While the creation of CBDCs could be a net positive, it will come with some side effects that are potentially risky for consumers or damaging to the overall economy. First, by cutting commercial banks out of maintaining accounts and transferring money, their role in our economy would be drastically altered and the entire industry could be destabilized. Destabilizing the financial industry would create a ripple effect around the world, which would damage financial assets and put retirement portfolios at risk. The Fed’s expanded role in commercial banking would also create privacy concerns. Every transaction conducted using CBDCs could be monitored and logged by the federal government. While this would crackdown on illicit transactions, this would come at a cost that many Americans would be unwilling to bear. The federal government’s database would also become an attractive target for hackers — who historically prey on older Americans — interested in obtaining money or data. Finally, the Fed’s digital currency could create competition with the U.S. Dollar, potentially weakening it.
Finding Safe Retirement Investments
Cryptocurrency and other digital assets are volatile and unregulated, and we caution against utilizing these assets in your retirement portfolio. In the same way that the value of securities-based investments – like stocks, bonds, and mutual funds – can be impacted by global events, cryptocurrencies fluctuate wildly in a short period of time.
If you are currently retired, or you are planning to retire in the next few years, you can’t afford to take on the risk of digital securities-based investments or the development of a national digital dollar. The closer you get to the retirement phase, the more urgent it is for you to explore safe alternative investments that exist outside the high-risk environment of Wall Street. At Crash Proof Retirement®, our licensed retirement educators help consumers protect their retirement savings from the unnecessary risk and fees associated with stocks, bonds, mutual funds, and dangerous cryptocurrencies by tailoring a unique system of Crash Proof Investments to meet each retiree’s specific retirement needs. To learn more about how you can credit interest comparable to securities-based investments while protecting your principal from being lost in a market crash, get in touch with Crash Proof Retirement® today. Call 1-800-722-9728 or visit our events page to sign up for one of our free retirement events in Bucks County and surrounding communities.
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