President Joe Biden and his administration have selected their new economic advisor, and she is a blonde with a lot of gusto. Is this good or bad for crypto?
Well, for starters, she is more than well-qualified to take on the essential role on Capitol Hill. Lael Brainard is a Harvard Ph.D. with over a decade’s worth of time spent on the Board of Governors of the Federal Reserve. Her most recent post was that of Vice-Chair of the Federal Reserve, second only to the man himself, Fed Chair Jerome Powell.
Needless to say, Lael Brainard knows and understands the underpinnings of both the United States and global economies. But what does this all mean for the crypto community?
Will we have a new friend in the Biden administration, or should we all start moving our crypto onto hard wallets now (we should probably be doing this anyway with the state of stablecoins… or lack thereof)?
How Does the Economic Advisor Feel About Crypto?
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 facilitate not only evasion, but also increase the risk of theft, hacks, and ransom attacks.”
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 Explains Her Vision For Crypto
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.
How Does Inflation Come Into Play?
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 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. New York State urged the company to stop the issuance of new Binance stablecoins (BUSD), while the SEC labeled them as unregistered securities. And sure enough, they did.
