Following last week’s congressional hearing on Bitcoin’s environmental impact, the United States continues its drive to regulate and define the law regarding cryptocurrency.
Since China managed to successfully ban cryptocurrency mining last year, the US has become the center of mining operations and now makes up the majority of hashrate. This means US policy on cryptocurrency now holds more significance than before, with the upcoming ‘executive order’ a looming threat. While crypto miners have shown incredible resilience when it comes to migrating their operations, a ban on mining in the US would still give Bitcoin a bit of a knock.
While exact details remain unconfirmed, the White House is expected to issue an executive order on crypto in the coming weeks. The order allegedly relates to national security and “the systemic risks of cryptocurrencies and their illicit uses.”
This means the order is more likely to focus on the financial risk side of things rather than the environmental impact, such as untraceable international fund transfers. This follows a proposal by House Democrats last week that would potentially give the Treasury Secretary power to ban crypto exchanges without notice.
2/ The so-called "special measures" provision (proposed by @jahimes) would essentially give the Treasury Secretary unchecked and unilateral power to ban exchanges and other financial institutions from engaging in cryptocurrency transactions. How would it do this? pic.twitter.com/f3tVow9nxA
— Jerry Brito (@jerrybrito) January 26, 2022
The flood of regulatory oversight means Bitcoin has had a rocky start to 2022, continuing a decline that began before Christmas last year. Despite the congressional hearing unable to reach a decisive consensus, Bitcoin fell by nearly 25% the following day. It has since made something of a recovery but still struggles to break above the key $40,000 resistance level.
However, a downturn such as this is not uncommon following the almost year-long rise that continued throughout 2021. Bitcoin could now be moving into the extended bear market phase of this cycle, similar to that which followed 2017’s parabolic rally to $20,000.