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The United States Releases Plan to Regulate Cryptocurrencies.

In: Crypto, Finance

On March 9, Bitcoin jumped above $42,000 fueled by optimism about a U.S. overhaul of crypto oversight that Treasury Secretary, Janet Yellen called historic. President Joe Biden’s executive order mandates government agencies to take a closer look at issues from developing a potential digital U.S. dollar to fight illicit finance.

The directive calls for studies and policy recommendations on issues ranging from protecting consumers to climate change. Under the plan, federal agencies from Treasury to the Commerce Department will have to research a number of topics, including the pros and cons of the government launching a U.S. digital currency.

Amid the releasing of the Feds plan to regulate cryptocurrencies, Ether climbed 8% while so-called privacy coins like Monero showed larger gains. The largest cryptocurrency, Bitcoin, rose as much as 11% to $42,581 on Wednesday, its highest level since March 4.

With the release of the executive order, the administration of Biden, has made it clear that the United States has the opportunity to lead the world in digital asset development, while also establishing new protections for individual consumers and society.

Janet Yellen, Treasury Secretary, praised the order in a statement (that was later removed) on the Treasury’s website on Tuesday, saying it strikes the right balance between fostering innovation and addressing potential risks. That, boosted sentiment in an industry that has long been perceived as needing a regulatory direction.

Officials will have to develop a framework for engaging with international partners on setting standards for digital assets. The studies mandated by the order include one led by Treasury on the future of money and payment systems, and another from the Justice Department on the role of law enforcement agencies in detecting, investigating, and prosecuting crypto-related criminal activity. It also calls for regulators to help outline risks tokens could pose to financial stability and offer suggestions for new rules or legislative changes.

Privacy coins allow for a higher degree of anonymity, but the networks they live on are less decentralized and less secure than Bitcoin, also limited in market share. The recent surge in privacy coins is mostly fueled by traders speculating on the possibility that such coins will be injected with more capital. Rather than a new trend, the current surge is most likely limited, and it’s safe to say we can expect more volatility.

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