Is Joe Biden’s Pick for Top Economic Adviser Good or Bad for Crypto?
The President of the United States – Joe Biden – will reportedly appoint Lael Brainard (Vice Chair of the Federal Reserve) as his top economic adviser.
The latter is a critic of cryptocurrencies, arguing they could undermine America’s financial stability. On the other hand, she is a proponent of a digital dollar that would be highly centralized and monitored by the authorities.
Anti-Crypto Position
According to a Bloomberg coverage, President Biden will soon name Lael Brainard as his top financial adviser. She previously worked at the White House, serving as a Deputy Director of the National Economic Council (NEC) under President Bill Clinton. Brainard was also nominated as a Fed Governor in 2014 by Barack Obama.
The Democrat is known as an opponent of cryptocurrencies, opining that bank involvement in the asset class could cause monetary chaos. She believes a potential crash of the digital asset market could resonate in the financial sector.
Brainard expressed concerns about Decentralized Finance (DeFi), saying the new technology could be a catalyst for possible illicit activities:
“The permissionless exchange of assets and tools that obscure the source of funds not only facilitate evasion, but also increase the risk of theft, hacks, and ransom attacks.”
Pro-CBDC
At the same time, Biden’s future economic adviser is fond of the creation of a digital dollar. She announced that America’s central bank was working on such a financial product nearly three years ago:
“We are conducting research and experimentation related to distributed ledger technologies and their potential use case for digital currencies, including the potential for a CBDC. We are collaborating with other central banks as we advance our understanding of central bank digital currencies.”
Brainard doubled down on her vision several months ago, claiming a digitized version of the greenback could provide enhanced protection for consumers and monetary stability:
“It is important for the United States to play a lead role in the development of standards governing international digital finance transactions involving CBDCs consistent with the norms of privacy, accessibility, interoperability, and security.”
Her transfer to the White House opens up a position at the Federal Reserve which has launched a campaign to tackle inflation by increasing interest rates. Some crypto participants believe the market could enter a bull mode once the central bank pivots from its strategy.
Federal Reserve Chairman Jerome Powell recently stated that inflation should drop to 2% before they cease the rate hikes. He also forecasted the target won’t be reached this year.
Crypto has usually headed south after each announcement about increasing interest rates, meaning it might suffer more due to the Fed’s plans.
The US Targets Crypto Firms
The appointment of Brainard coincides with the US SEC’s intention to impose additional regulatory scrutiny on the digital asset sector.
The watchdog alleged Kraken of offering securities as staking services to American consumers. Shortly after, the platform ceased its product and paid $30 million in disgorgement, civil penalties, and prejudgment interest.
The next victim was the stablecoin-issuer – Paxos. The New York State Department of Financial Services urged the company to stop the issuance of new Binance stablecoins (BUSD), while the SEC labeled them as unregistered securities. Paxos followed the request and announced it will no longer mint such tokens from February 21.
Featured Image Courtesy of FT
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