However, since the election in November 2020, the new administration might present a new opportunity to Bitcoin and other digital currencies.
In this article, we would be analyzing the possible upsides and challenges that Bitcoin would be likely to affect digital currencies in this presidency and the future of cryptocurrencies.
However, before we begin to discuss the obstacles and forward developments of crypto under Biden, let us look at how the past administration.
Bitcoin and cryptocurrencies under Donald Trump
Before we can look at this topic, we have first to understand what happens to most cryptocurrencies' prices during election periods.
As history has portrayed, during the uncertainty of elections and the importance of the united states elections, investors, especially in the stock market, search for a way to protect the value of their funds. In the search for a hedge, investors move to cryptocurrencies to protect their finances.
When looking at the election of President Trump, most investors anticipated a disaster in the economy. Biden included. There was a shift from a more stable cryptocurrency market, which increased the prices of various assets.
During his presidency, trump launch several attacks against the idea of cryptocurrencies with statements such as;
"I am not a fan of Bitcoin and other Cryptocurrencies, which are not money, and whose value is highly volatile and based on thin air. Unregulated Crypto Assets can facilitate unlawful behavior, including drug trade and other illegal activity."
Other statements made by Donald Trump indicated his intent to maintain the US dollar as the only dominant currency in the world and not cryptocurrencies such as Bitcoin.
However, not just the president was against the idea of digital currencies, but also several well-known names such as congresswoman Maxine Waters, who has openly asked the president-elect, Joe Biden, to rescind policies that allow traditional financial institutions custody of crypto and stable coins.
Although some influential political people and business moguls such as Warren Buffet, disposed of the idea of crypto, Tesla founder Elon Musk and even individuals appointed by the president came out to admit the advancement and opportunities promised by cryptocurrencies.
Why the Trump administration clamped down on Bitcoin and cryptocurrencies
- One of the main problems about Bitcoin and other cryptocurrencies in the trump administration stems from how decentralized it is. This makes it possible to send huge amounts of funds across various cryptocurrency wallets and not track the parties involved.
- Another excuse given by the government for imposing these policies is that Bitcoin and other cryptos give room for money laundering, terrorism acts, and other fraud forms.
These reasons are not good enough because scammers can still carry out fraud with traditional fiat currencies.
Proposed solutions
FinCen proposed the regulation of cryptocurrencies by exchanges. This means that policies will be put in place, requiring the release of personal identity information by traders for transactions.
This policy, if imposed, would have overruled one of the key features of Bitcoin and other cryptocurrencies; this is the anonymity that it provides to its users. Users who desire to make a transaction worth over $3,000 would have to divulge personal information to the exchange and acknowledge the recipient wallet's ownership.
The above-stated policy is most effective in the use of private wallets. Have access to the release by the FinCen here.\
Another proposed solution to the inability to track cryptocurrency is crypto holders' requirement to report their holdings, especially when the portfolio's value is worth more than $10,000 at any foreign service company.
What do these policies mean?
Though the past administration intended to enforce these policies before the new administration's entry, this failed. However, if the government passed these policies, what would the effect be on the crypto space?
Bitcoin and the majority of cryptocurrencies thrive on the back of decentralization and anonymity. However, this would be very restrictive as the government would keep tabs on every transaction and knowing who makes such transactions. Therefore, if enforced, such policies hinder the sole purpose for the creation of such financial systems.
2020 Presidential Elections
There was a lot of controversy in the last presidential election, and this was due to several factors such as;
- Covid 19 pandemic ravaging the world, and the poor handling of the outbreak by the Trump administration.
- Several controversial occurrences put the then president, Trump, in the spotlight for the wrong reasons. Such incidents include the handling of the BLM (black lives matter) protest.
Therefore, all these crucial events played a major part in making the 2020 US presidential election a very important event. The uncertainty and economic crisis that the country experienced impacted many companies' stock prices, which saw the migration to the crypto space, creating a ripple effect of rising prices of assets.
Now that we comprehend the challenges Bitcoin and other cryptocurrencies faced under most of the Trump administration, let us discuss some positive events in the crypto space under the Trump administration.
Mainstream adoption of Bitcoin and cryptocurrencies
Many countries are beginning to roll out their cryptocurrencies, and establishments are beginning to adopt cryptocurrencies in making transactions for services. It is fair to say that cryptocurrencies, in general, will be expected to gain more acceptance under the presidency of Biden.
We assume this because as advances are being made, the United States will also want to have a part of it, and this will see the backing of digital currencies by the government. Already, key people with a vast knowledge of crypto are in positions where their influence can see the widespread adoption of crypto. An example of such individuals includes Brian Brooks.
Who is Brian Brooks, and why is he key in the adoption of cryptocurrencies?
As we all know, the office of the comptroller of the currency is charged with the supervision of the national banks of the United States. The office also ensures safe practices, prevents money laundering/ terrorism financing, and ensures effective national banks' effective practices.
Now that we understand what this office is and how it functions let us see how it is related to cryptocurrency.
Brian Brooks is the former COO and senior deputy comptroller in the office of the comptroller of the currency. And through his role.
Buffer the adoption of cryptocurrencies by
- Publishing a letter that granted permission to national banks and other federal savings entities. Now provide cryptocurrency services to clients in the form of custody services. This letter was released on the 22nd of July 2020.
- By September 2020, his office released a second letter on the 21st, which permitted national banks and federal savings entities to deposit reserves in cryptocurrency stable coins.
- On the 12th of January 2021, Brian Brooks stated that DeFi could bring about change by preventing bias and fraud. Which was continually affecting the traditional banking system.
As the above illustrates, Brian Brooks encouraged incorporating Bitcoin and other cryptocurrencies into the traditional banking system. In his opinion, there is no need for several regulations to be imposed on Bitcoin and cryptocurrencies. Still, all that is required is to clearly state the activities which would be allowed.
A possible question on most readers' minds would be, "why is Brian Brooks so knowledgeable about cryptocurrency?"
The answer to this question would be that he (Brian Brooks) has so much knowledge about cryptocurrencies. And the huge potential of growth they posed because he was the chief legal officer of Coinbase. One of the most popular cryptocurrency exchanges available. Therefore, this made him one of the key individuals in the fight for the adoption of cryptocurrencies. That position in the OCC was a perfect start.
Brian Brooks also came under some criticism, as the Democratic members of the Congress claimed that he gave so much attention to creating a shift from traditional banking to DeFi and giving little attention to the current pandemic ravaging the country.
However, Brian Brooks has stepped down from his position at the OCC and has been replaced by Blake Paulson.
Bitcoin and crypto under Biden's presidency
The Biden presidency's onset had the future of Bitcoin and other cryptocurrencies shrouded in a lot of mystery. No one knows the approach which this new administration will take concerning cryptocurrencies.
However, reports illustrate the willingness of the Biden presidency to incorporate Bitcoin and other cryptocurrencies. Let us look at some of the ways this administration wishes to incorporate digital currencies.
Let's take a look at some of the positives that could have an impact. Mainly on the use of Bitcoin and other cryptocurrencies;\
The nomination of Gary Gensler: president Biden nominated Gary Gensler for chairman of the SEC. This is seen as a positive because Gary Gensler is well knowledgeable about crypto and blockchain. He also teaches blockchain at MIT Sloan School of Management and an ex-banker working with Goldman Sachs.\
Institutional investors have an increased opportunity to enter the crypto market as few regulations will be set to ensure their investments' safety.
Challenges that Bitcoin could face under Biden's presidency
Still, a major issue that is likely to repeat itself in this administration is regulation. Too much regulation imposed on Bitcoin and other cryptocurrencies will affect the growth in value of the assets.
How do all these affect the Bitcoin Value?
As earlier stated, Brian Brooks aimed to make cryptocurrencies incorporated into the banking system. Which he predicted would positively affect the price of Bitcoin in the future.
However, he could be right, and this is because the clarifications provided by the released letters intended to guide financial institutions on such issues. Therefore, when such Policies are set in place, it creates room for institutional investors to take fewer risks investing in Bitcoin, such as Bitcoin Futures.
Bitcoin price prediction
The Bitcoin price has seen a huge gain since the presidential election in November 2020. However, recent times have shown a major price correction, with Bitcoin falling from about $59,000 to as low as $45,000. This also had a ripple effect on other altcoins as they, too, experienced massive corrections.
Such a price action was met with panic as most investors and traders considered the end of the bull run. However, in the crypto market, corrections are necessary for coins to establish a new market price (consolidate). Therefore, after consolidation, there is more room for growth.\
With this said, Bitcoin price predictions place the value as high as $100,000 or more by the end of the year. After Biden won.
Currently, the Bitcoin price chart illustrates the price to be over $50,000, constantly trying to establish a support level. As earlier said, dips in the market are healthy for the continued growth of prices. Therefore with the right fundamentals and technicals depicting a stable level over $50,000. The Bitcoin dollar cost by the end of 2021 will be over $100,000.
We also agree with this prediction as more widespread adoption is expected this year and under President Joe Biden administration.
With all these said, it is fair to assume that the prices of Bitcoin would increase. However, it is too early to see how the present administration will face Bitcoin and other cryptocurrencies.
Conclusion
This article extensively studies Bitcoin in the light of the just-concluded elections and also what cryptocurrencies. In general, could experience under this new administration, with regulation being of major importance going forward.\
Cry[ptocurrencies are attaining more adoption worldwide, with major companies such as Tesla investing. It is only a matter of time until more institutions and countries acknowlege the benefits of digital currencies.\
To learn more about cryptocurrency price predictions, read this article.
