“The rise in digital assets creates an opportunity to reinforce American leadership in the global financial system and at the technological frontier, but also has substantial implications for consumer protection, financial stability, national security and climate risk.”

— White House “Fact Sheet” on President Biden’s Cryptocurrency Executive Order

Dear Reader,

Ha, ha, ha. Read the above quote.

Ok, read it again. And think about it.

What did my Dad used to say? Something like a dollar late and too soon? A little too late and a dollar short? I forget, but it was wisdom born from a life on the farm.

Crypto, more specifically blockchain, is meant to be a decentralized way to own, use, define, accept, belittle, uplift… money. Decentralize being the operative word. Ok, now you get a chance to read the quote again.

Money exists for a reason. I have a couple cows. You have a bundle of turnips. How are we going to know which equals how much of the other. Oh, yeah, there’s this little thing called currency.

The biggest innovation of the tech age is digitized money. Freedom for everyone! Yay.

Whoops, what’s this?

If it’s money, it must be regulated, right?

The Biden administration released its “long-awaited” Executive Order targeting the digital marketplace.

Just when we thought it would get better, the world-improvers stick their fat, gout-riddled feet right in the middle.

The decree sets the stage for regulation down the road. But for now traders can breathe easy. There’s no set timetable. Basically, the regulatory agencies have been instructed to study the various issues with cryptos and make suggestions.

More studies, please. Oh, and remember to file your taxes on time this year. Who else is going to pay for the new studies?

Yep, it’s a plan to make plans that could lead to more plans. A meeting to set the agenda for the next meeting.

Of course, figuring out ways to deal with fraud is one of the top priorities… as well as ways to curb cryptos’ use in clandestine activities. Such as, one supposes, skirting international trade sanctions.

The government will also look into the usual nanny state claptrap, like encouraging more energy-efficient ways to mine cryptos to help protect the environment.

You may recall that James Altucher believes that the government’s attention is a good thing, because regulation will further legitimize cryptocurrencies in the eyes of anyone who is on the fence. While we don’t necessarily agree, we also won’t besmirch his opinion here.

Perhaps the biggest surprise in the Executive Order is its support for a crypto-based dollar. The idea is known as a Central Bank Digital Currency (CDBC)… and the United States isn’t the first country to consider making its money part of the blockchain.

Back in April 2021, Jim Rickards told his readers:

China’s lead in the race to produce the first major central bank digital currency is well-known. The Chinese CBDC is already being used in prototype form and may receive a global coming out party at the 2022 Winter Olympics to be held in Beijing.

Sure enough, Reuters reported last month that over 2 million digital yuan traded hands electronically during the event — every single day.

The Federal Reserve has been slow-stepping a plan to follow suit… an effort we’ve dubbed Fedcoin. Officials announced it was exploring the idea last year. Its most recent report simply gave the pros and cons of such a move, putting off any decision until it received feedback from the public and government agencies.

More plans to make plans… plans to make plans… central planning… what if the Biden administration just didn’t have any plans to regulate cryptos?

Biden’s Executive Order doesn’t speed anything up… simply saying the U.S. government should place “urgency on a research and development of a potential United States CBDC, should issuance be deemed in the national interest.”

These types of statements are funny, if you look at them in the right context.

All the same, we’re still wondering, given that it’s probably an eventual given, if a Fedcoin would be in the people’s best interest.

James Altucher made it clear that he thinks it would be. If nothing else, it will make things like digital wallets more commonplace… which will make the decentralized cryptocurrencies much more accessible to everyday people.

Even Jim Rickards agrees there could be some benefits, like faster, more secure payments. Entire financial industries like credit card companies would have to change their business models to remain relevant. “Stock prices of companies such as JPMorgan, Citi, MasterCard and Visa could be wiped out as the new digital payment technology takes hold,” he warns.

He also sees potential dangers for Americans:

The end game for CBDCs would closely resemble George Orwell’s dystopian Nineteen Eighty-Four. It would be a world of negative interest rates, forced tax collection, government confiscation, account freezes and constant surveillance.

In other words, it would be even easier for the government to weaponize money. It’s time to start planning your escape strategy now… before this administration or even the next one stops planning to plan and actually does something.

Our upcoming Sessions guests can help… this week we’re touring the globe from Buenos Aires, to Ukraine, New York City, Beirut and Jordan… should be fun.

Follow your bliss,

Addison Wiggin
Founder, The Financial Reserve