Last updated on September 25th, 2023 at 06:03 pm
Like other countries, the United States has witnessed an influx of crypto platforms and users. With the rise in popularity of digital assets, authorities ranging from the White House to the U.S. Securities and Exchange Commission (SEC) have been actively monitoring and regulating the space. Lawmakers in the U.S. Congress are also involved in monitoring activities within the confines of the country.
This article will analyze the growth of cryptocurrency in the U.S., its usage, regulatory attempts, and related activities.
Crypto Popularity in the U.S.
Americans have become interested in the features that cryptocurrencies offer to their users.
In a study by Pew Research Center, a significant number of adults living within the country have heard about this type of digital asset. A survey organized in September 2021 by the Pew Research Center showed that 16% of Americans have invested in and traded cryptocurrency.
The study stated that adult males from the ages eighteen (18) to twenty-nine (29) were most likely to have accessed cryptocurrencies. 86% of people living in the country believed that they knew about cryptocurrencies, regardless of how little they knew, while 24% agreed they had an in-depth understanding of digital assets.
According to Pew Research Center, three-in-ten Americans aged eighteen (18) to twenty-nine (29) had traded cryptocurrencies, more than others in older age groups. According to the findings, men were more inclined than women to use or trade virtual assets.
According to the research findings, persons of color (Asian, Black, and Hispanic) were more likely to have used digital assets than White adults.
The findings show that an increasing number of people in the United States are utilizing cryptocurrencies. This is not surprising given the government’s deliberate efforts to monitor, research, and regulate cryptocurrencies.
The Rise of USD Stablecoins
Stablecoins are digital assets designed to be stable, unlike conventional cryptocurrencies. The values of these digital assets, as their name implies, do not change over time, regardless of whether the crypto market is bearish or bullish. Their values are pegged to fiat currencies such as the Yen, USD, and even GBP.
Stablecoins are intended for users who want to maintain stable portfolios in the volatile cryptocurrency market. Common examples of dollar-denominated stablecoins are USDT from Tether, BUSD from Binance, and USDC from Circle and Coinbase.
The adoption of stablecoins has risen over time, from $5 billion in December 2019 to at least $158 billion as of December 2021.
The decentralization and transparency of stablecoins have been cited as reasons for this growth. Unlike fiat currencies, the US-denominated stablecoins like USDT and USDC are not necessarily under the control of a single authority like the United States government.
Transactions are swift, and users do not have to jump through hoops. Sending USD from one country to another may come with red tape that must be strictly followed, but these bureaucratic activities do not exist with stablecoins. Cross-border payments are easier for migrants living in the United States when they use stablecoins such as USDT.
Circle, the USDC stablecoin issuer holds its reserves in U.S. Treasuries and U.S. dollars. This has given people from different parts of the world access to the highly demanded USD. At the moment, the demand for USD outweighs its supply, and it is difficult for individuals living outside the United States to access it. With the advent of USD-denominated stablecoins, this may change.
A Brief Overview of Crypto Exchanges in the U.S.
The United States is one of the countries with strict regulations governing the operations of cryptocurrency exchanges within its borders. It has evolved from the wild west, where crypto exchanges and platforms could operate without regard for legislation, to a government that only permits the operations of a limited number of crypto exchanges within its borders.
All cryptocurrency exchanges licensed to operate in the United States are regulated by the Commodity Futures Trading Commission (CFTC). These cryptocurrency exchanges must implement a comprehensive KYC/AML protocol on their platforms. Cryptocurrency exchanges in the United States require more extensive identity documentation than those in other countries.
Residents in the United States have a limited selection of cryptocurrency exchanges to choose from because many regular trading platforms are not licensed to operate in the region. For example, the standard Binance exchange does not operate in the United States; instead, a version was developed to cater to Americans only.
Another common element in these crypto exchanges is trade limits on the volume of cryptocurrencies that a user can purchase in a day. Examples of popular crypto exchanges operating in the U.S. include Coinbase, Gemini, Binance.US, CEX.io, and Kraken.
Was the listing of Coinbase on the stock market a “Netscape” moment in the U.S.?
The Coinbase IPO went live on April 14, 2021, and it was regarded as a landmark moment in crypto. Coinbase became a publicly listed firm, a first for a cryptocurrency company.
According to the Financial Times, the event was reminiscent of the launch of Netscape in 1994, widely regarded as a pivotal event at the time. Netscape was involved in the development of a technology that gave rise to the World Wide Web.
The article‘s publishers ascribed the title of Netscape 2.0 to Coinbase. And if this is anything to go by, it indicates that Coinbase, like Netscape, is building a technology that will offer untold value to the world.
Netscape, upon launch, allowed individuals to access the internet, making the founders of eBay and even Amazon conceptualize e-commerce.
Coinbase operates a crypto trading platform that allows individuals and institutional investors to access different crypto trading features.
Just as Netscape ignited a new economy, giving rise to e-commerce and other aspects of the internet economy. Coinbase is actively accelerating the growth of the crypto economy.
Reactions of the U.S. Federal Government to Cryptocurrency Adoption
The Federal Reserve System (FRS) is researching different aspects of the concept of a digital currency in the United States and has released a report to that effect in 2022. According to the report, the FRS considered the benefits and costs of creating and operating a government-issued digital currency or CBDC.
The FRS opened the door for stakeholders, including the general public, to express their views on a U.S. CBDC before the end of May 20, 2022. The Federal Reserve would subsequently analyze the inputs provided before deciding on the development and issuance of a CBDC.
In its report, the FRS stated that it would not go ahead with the development of the CBDC “without clear support from the executive branch and from Congress, ideally in the form of a specific authorizing law.”
The U.S. Congress hosted the CEOs of six cryptocurrency companies in a session. The CEOs spoke before the House Financial Services Committee about the risks and prospects of cryptocurrencies.
California Democrat Representative Maxine Waters chairs the committee tasked with researching and analyzing cryptocurrencies, CBDCs, and other digital assets and recommending how best to regulate them.
Moves by the White House to Regulate The Crypto Sector
President Joe Biden has shone the spotlight on the crypto space with his newly issued executive order. The executive order directed various government departments to investigate CBDC (central bank digital currency) and cryptocurrencies, particularly their effects on the U.S. economy. The executive order also tasked these agencies with developing a strategy for the regulation of digital assets.
The executive order authorized a CBDC study, which will be conducted by multiple agencies including the U.S. Departments of Treasury, State, Justice, and Homeland Security. The Director of the Office of Science and Technology Policy has been tasked with conducting a technical analysis of the criteria for a CBDC development system.
Treasury Under Secretary Nellie Liang stated during a Senate Committee hearing that the Financial Stability Oversight Council (FSOC) is analyzing the possible economic hazards of stablecoins and steps that can be taken to mitigate them. According to President Biden’s executive order, these regulatory authorities must look for measures to safeguard consumers and businesses from the hazards and risks associated with cryptocurrency.
Clampdown on Crypto Ads
Different countries have varying regulations concerning crypto ads. For instance, the U.K. has strengthened regulations governing crypto companies advertising their services.
During the 2022 Super Bowl, some notable crypto platforms such as FTX, Coinbase, and crypto.com bought millions of dollars worth of ad slots to advertise their services. This drew the attention of some critics, and one of them is a top Democrat on the Senate Banking Committee.
According to Sherrod Brown, Senate Banking Committee Chair, it was pointless for a digital asset that claimed to be money to run an advert. During the congressional hearing, he argued that cryptocurrency platforms did not disclose the risks associated with crypto usage in their advertisements.
In Conclusion,
- There has been a steady rise in the number of people using cryptocurrencies in the United States.
- Men are more likely to utilize digital assets than women.
- Younger adults are more likely to use cryptocurrencies than their older counterparts.
- US-denominated stablecoins are actively utilized due to ease of use, transparency, and decentralization.
- President Biden has issued an executive order for relevant agencies to research cryptocurrencies and their risks in the country.
- Only a select few crypto exchanges that meet the specified regulations are allowed to cater to the needs of U.S. residents.
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