Joe Biden finds a way to satisfy the amount of crypto

Hermann Rorschach developed a psychological test around a century ago that still bears its name today. In order to assess the spirit of his patients, he presented a number of ink blobs and asked them to describe the picture or emotion that produced every design.

Although his intentions were different from that of a Swiss psychoanalyst, Joe Biden started a similar exercise in the financial world this week when he issued a long -awaited implementation regulation on digital assets that somehow managed to create a positive response in the cryptocurrency community.

The US President's explanation was narrowly about political details. There were no new rules for cryptocurrencies or additional requirements for players and platforms in a multi-Billion dollar trade with a lot of leverage, strong derivative activities and passionate investors who were convinced that they had found the next big thing of finances.

bidens marching order was his bureaucracy. In order to prepare the path for federal regulation, he called for a number of reports, ratings and consultations in which a large part of the government's executive was involved, and set deadlines for their completion that were between 90 days and one year.

One might think that all this whisper within the Beltway would deter crypto partisans, which is known for their libertarian tendencies. But like a Rorschach motif that looks at an ink blob and imagining a butterfly, they liked what they saw. Among the more than 5,000 words of the Executive Ordinance were several sentences that delighted the crypto community.

BIDEN's obligation was to "strengthen the leadership role of the United States in the global financial system", among other things through "the responsible development of payment innovations and digital assets". They were also pleased that he saw the potential for a digital currency of the US Central Bank, "to promote better access to the financial system", and attached great importance to examining how such an innovation would work in practice.

This factual tone of the executive regulation contributed to calming the nerves of a crypto community that was openly concerned that the bid administration did not like it-and could now be trying to use it hard to prevent Russia to use blockchains to avoid sanctions that were subsequently imposed. Although it is risky to attribute the daily crypto price movements of fundamental factors, it is worth noting that the leading digital currencies added strongly after the announcement of the White House on Wednesday.

"The executive regulation is a step forward," said Christopher Giancarlo, who earned the nickname "Cryptodad" for his inviting approach to digital currencies when he was chairman of the US Commodity Futures Trading Commission. "I praise the white house for a balanced, comprehensive and future -oriented executive regulation on digital assets."

The type of reports ordered by the President indicates that his government still has many concerns about cryptocurrencies. Biden has asked civil servants to check their effects on national security, financial stability, money laundering and other illegal activities, consumer protection, privacy and energy consumption.

But Sarah Hammer, a former civil servant of the Ministry of Finance, the managing director of the Stevens Center for Innovation in Finance at the Wharton School of the University of Pennsylvania, said that the sheer strictness of the bidexecutive order should be soothing for digital asset entrepreneurs.

"It mobilizes resources for the type of research and studies that are necessary for effective and faster implementation of regulations," she said. "It is crucial to call up the agencies for coordination."

How much time will pass for a formal US cryptopolitology to take shape is unclear. Biden, for example, gave the officials 180 days to find out whether new laws would be necessary if the United States should strive for a digital central bank currency. If a new law is necessary, the congress would have to intervene, and that would probably slow down things.

In the meantime, the bet in the industry insists that the regulation crypto company is subject to enforcement by enforcement. Gary Gensler, Chairman of the Securities and Exchange Commission, has expressed this possibility particularly loudly and argued, for example, that crypto trade and credit platforms that promise returns are wrong if you believe that you can avoid a review for existing laws.

Gensler underlined his point of view last month, when a crypto company from New Jersey called Blockfi agreed to pay $ 100 million to the Sec and $ 32 states to pay allegations that offered interest-bearing accounts-the annual percentage returns that are far above those on bank savings accounts-without registering as securities. Blockfi has neither admitted nor denied the accusations of the SEC.

This type of regulation can be much more painful than reading the prose of a presidential executive regulation. I'm not a Rorschach, but maybe it will help to explain why bidens dry list of political goals and research orders found such a grateful audience in the crypto community.

gary.silverman@ft.com