Cryptocurrency is finally on the up after weeks of being stuck in a rut. And there’s one reason why.
Cryptocurrency has surged in price after US President Joe Biden signed an executive order on blockchains in the early hours of Thursday morning, Australian time.
For the first time in US history, President Joe Biden released an executive order on cryptocurrency, revealing how it will be investigated and regulated for the future.
Crypto enthusiasts had been waiting with bated breath, with rumours for months that a major crackdown was headed for digital asset holders.
But the general consensus is that the presidential order was relatively soft on cryptocurrency, prompting investors to breathe a sigh of relief and others to pile in.
The US government’s plans were leaked on Wednesday, with the Treasury office accidentally publishing a press release before quickly taking it down. This gave the market more time to react positively to the news.
In the past 24 hours, the market capitalisation of cryptocurrency has surged from US$1.76 trillion (A$2.42t) to US$1.83 trillion (A$2.5t), an increase of more than six per cent, according to CoinMarketCap.
The top-ranked cryptocurrency, Bitcoin, has skyrocketed, jumping by 10 per cent to a 24-hour high of US$42,577 (A$58,145).
Ethereum isn’t far behind, climbing up by five per cent to US$2773 at its day peak.
The exec order aims to facilitate innovation within the cryptocurrency space while also ensuring protections for consumers and investors, according to a release from US Treasury Secretary Janet Yellen.
Ms Yellen said the department would “support responsible innovation” as well as making sure to “complement” existing plans for regulations in the industry.
“Under the executive order, Treasury will partner with interagency colleagues to produce a report on the future of money and payment systems,” Ms Yellen continued.
“Because the questions raised by digital assets often have important cross-border dimensions, we’ll work with our international partners to promote robust standards and a level playing field.”
Later on, she added: “Treasury will work to promote a fairer, more inclusive, and more efficient financial system, while building on our ongoing work to counter illicit finance, and prevent risks to financial stability and national security.”
The release was endorsed by President Biden, who signed the order.
Around 9am US time, the price of bitcoin and ethereum can be seen spiking, coinciding with when the order was officially announced.
Experts said it was all good news for crypto enthusiasts.
Marcus Sotiriou, analyst at digital asset broker GlobalBlock, wrote in an emailed note: “The order seems relatively benign, hence giving the market some clarity.
“As many investors had prepared for the downside risks of this event by waiting on the side lines, we are seeing many buy bitcoin back in what appears to be a spot-driven rally.”
Cameron Winklevoss, co-founder of the Gemini crypto exchange, said the executive order was overwhelmingly “positive”.
“Based on remarks, crypto [executive order] is positive and calls for co-ordinated and comprehensive approach to digital asset policy that will support responsible innovation,” he wrote on Twitter.
“I applaud this constructive approach to thoughtful crypto regulation and look forward to working together with the various stakeholders to ensure that the US remains a leader in crypto,” he added.
Tony Sycamore, APAC market analyst at City Index, said the sudden rise was almost entirely because of the US executive order.
“An encouraging move for cryptocurrencies overnight as bitcoin rebounded above $42,000, just when the market was seriously questioning why the asset class hadn’t performed better during the conflict in Ukraine,” he said in an emailed note.
“After all, Bitcoin does have claims to be a safe haven that hedges against both portfolio/geopolitical risks and hedges against inflation.
“The rally came after the Biden administration executive order called for a co-ordinated and comprehensive approach to digital assets.”