Challenges and promises of crypto assets | Business

In order to regulate and develop the use of crypto assets in an orderly manner, President Joe Biden has asked several federal agencies to prepare the necessary studies to act in a comprehensive and coordinated manner before these markets. Many have seen this announcement as a quick US response to prevent Russia from circumventing Western-imposed sanctions. But the truth is that it has been an expected step, and nothing hasty, after the various attempts by US agencies to independently regulate the many edges of a highly complex market. The announcement already lists several of the risks that should be eradicated or mitigated (such as possible harm to consumers and investors, financial destabilization or facilitation of money laundering), while recognizing the promises that this type of asset holds ( such as financial inclusion, its innovative potential and the strengthening of competitiveness).

The order signed by Biden includes a detailed schedule for the delivery of the different reports, with terms ranging from a few months to a maximum of one year. Although the time is not much, the different analyzes already have previous work. Without going any further, the Financial Stability Board published a report last month identifying future risks to global financial stability, inviting member countries to coordinate a response before these markets acquire a critical size.

Biden also requested an analysis of the digital dollar, a report that also has extensive precedents. There are 40 countries that today develop, or have already implemented, digital versions of their currencies, with another 40 economies studying this possibility (including the European Union). And within the US, the Federal Reserve published in January a first study of a hypothetical digital dollar, initiating together with MIT the exploration of the possible technologies that support it (Hamilton project).

Thus, the US accelerates the pace to face the world of crypto assets. It does so in a coordinated manner, displaying serenity against those who predict the death of the dollar at the hands of some digital currency. A correct attitude of the North American Government, since there is a broad consensus that the current hegemony of the dollar does not derive from a better technology of its banknotes, but rather from two other factors: being the legal tender of the largest economy on the planet and the anti-inflation credentials of your issuing institution. Only the European Union and China present alternatives that could break said hegemony in the future. And no, it would not be due to digital versions of their respective currencies, but rather the product of the strength of their economies and the solidity of their institutions.

Alexander Neut, from BBVAResearch.