The Biden administration is discerning the benefits of regulating cryptocurrencies by viewing these coins as “insured depository institutions.”
This announcement brought mixed reactions among the cryptocurrency market. On the one hand, regulating cryptocurrencies would require the government to study cryptocurrencies carefully to create rules and policies.
This regulation would require the government to engage in important discussions about financial regulations, economic innovation, and national security.
More importantly, these policies would also require significant coordination between different agencies in the executive branch. The Biden administration also considered appointing a White House representative for cryptocurrency.
On the other hand, the government’s idea to regulate cryptocurrencies also hinders the primary essence of cryptocurrencies.
The main problem the government will need to go through is trying to figure out a way across the P2P framework.
The government’s biggest fear is the cryptocurrencies’ potential to destabilize broader markets. Without regulation, issuers might need to sell off their assets to maintain price parity.
For Ripple, establishing a regulatory body would mean that Ripple would operate under the Securities and Exchange Commission. However, since Ripple primarily caters to financial institutions, participating with governing bodies might also increase the coin’s receptivity with other institutions.
Currently, the White House declined to provide any further comment about this initiative. Nevertheless, regulating cryptocurrencies would require holders to fall under the jurisdiction of the Securities and Exchange Commission, the Commodity Futures Trading Commission, and the IRS.
These governing bodies would also subject cryptocurrency holders to income or capital gains tax.