New York: Crypto: Third Largest Currency of World. Last week, the “Executive Order on Ensuring Responsible Development of Digital Assets” issued by President Joe Biden of the USA called for a broad review of digital assets, including cryptocurrencies, citing the $3 trillion digital asset market cap as of November 2021.
At $3 trillion, Crypto is the third-largest currency of the world after the USD and the Euro.
The Order seen as a positive step might lead to a surge in Bitcoin prices, putting digital tokens above a crucial psychological barrier of being recognised as a legal asset. Bitcoin has gained 15% in the past week, while Ethereum is up 11%, boosting the overall value of digital tokens. Those two coins have a combined market capitalisation of $1.2 trillion
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The global crypto market has rebounded strongly after a flash crash following Russia’s invasion of Ukraine in recent days. Recently, $200 billion in value was erased. But the market improved following the imposition of sanctions from the U.S. and the E.U. With the return of the investors, prices began to rise. As a war strategy, the
Ukrainian government has urged crypto exchanges to block all transactions from Russia to ensure sanctions.
Market capitalisation is a financial measure typically used for publicly traded firms, computed by multiplying the price of a share by the numberof outstanding shares. However, cryptocurrency analysts calculate it as the price of the virtual currencies times the number of coins in the market. The development gives cryptocurrency investors an idea of the overall market size. The present count of crypto coins stands around 12000 only, reflecting high value due to limited supplies.
President Biden’s Order emphasised the urgent need to protect financial stability and mitigate illicit use of digital assets. It promotes equitable access to safe and affordable financial services, support for tech advances and responsible use of digital assets. The Order didn’t announce any new policies or programs, and it strongly urges the Federal Reserve to look more seriously at creating its digital currency for the central bank. Furthermore, it underscores the need to assess the benefits of government use of Cryptocurrency.
As many as 16% of American adults have invested in cryptocurrencies, including 43% of men ages 18 to 29. The ever- rising popularity of Crypto has seen a challenge to the supremacy of the ,U.S. Dollar. The country wants to play a role in the worldwide governance of digital assets to remain a technology and innovation leader.
The Order also emphasised the exploration of a U.S. Digital Currency, often referred to as the Central Bank Digital Currency (CBDC), as several governments and cities across the globe have announced plans to create their own CBDCs.India is working intensely to launch its Digital Currency in 2023. The private sector worldwide is ahead, with companies operating in digital asset spaces like decentralised finance and nonfungible tokens.
The best thing mentioned in the Executive Order is that climate change concerns the exponential growth of digital assets. The crypto mining process comes at a high energy cost for the specialised computers that mine and run the algorithms to validate and increase the circulation of new bitcoins. Once Cryptocurrency is adopted, minimising energy costs should be one of the top priorities of governments across the globe.
Though the Order calls for urgently needed government research and development in the space, it remained short of accepting Cryptocurrency as a legal tender.
There is an important message to the aspirational Indian society in the U.S. government order. With its stock-in-process economy coming out of Covid-19 disruptions, India should conduct proper due diligence on various aspects of Crypto, including losing cheaper funds to banks, high energy consumption, and adverse climatic impacts before launching its Digital Currency.
- Hargovind Sachdev
