President-elect Joe Biden gave details on his $1.9 trillion spending proposal, which he aims to pass as soon as he takes office. The Biden administration expects to pass new legislation more easily than the previous administration, following two democratic wins in the Georgia senate special elections. FinCEN has delayed cryptocurrency regulation following pushback from much of the industry. These regulatory changes helped Bitcoin recover to near all-time highs.
- Joe Biden has announced details for a stimulus package aimed at fighting the economic fallout of COVID-19. The plan allocates $1.9 trillion in spending across a broad range of relief programs. Spending would include one-time direct payments of $1,400 to qualifying citizens, increased unemployment benefits, and funding for schools that need aid to reopen. The Biden administration expects to pass the bill relatively easily following two democratic senate wins in the Georgia special elections. These wins bring the senate to a 50-50 split, with the tie-breaking vote belonging to Vice President-elect Kamala Harris. The democratic victories and continued fallout from COVID-19 have the United States positioned to tally another huge budget deficit in 2021 and beyond.
- FinCEN has extended the comment period for several aspects of proposed regulation designed to monitor cryptocurrency transactions in the United States. The initial proposal included significant reporting and record keeping on customers who executed cryptocurrency transactions. Even though regulation represents a necessary step in Bitcoin adoption, these rules would be likely to have an adverse effect on Bitcoin markets, driving many transactions out of the country. The new comment period will allow an additional 15 days for feedback on reporting requirements for large transactions and 45 days for record keeping on smaller transactions. This decision comes after the agency received an unusually high number of responses and push back on the proposal, including Twitter & Square CEO Jack Dorsey’s concerns about “unnecessary friction and perverse incentives for cryptocurrency customers.”
- Bitcoin has largely recovered after dropping back to $30,000 from recent all-times highs around $42,000. The currency is trading around $36,000 at the time of writing, and has seen its price stabilize slightly, following a period of high volatility during the rapid price increase. This volatility is expected to continue decreasing as the Bitcoin markets mature and institutional investors with more predictable trading patterns increase their holdings.
The Biden administration, as well as other parts of government, have made their intentions of widespread spending and loose monetary policy clear. The democratic majority in the House and close majority in the Senate will increase the effectiveness of the Biden administration. The United States is positioned for a period of huge spending and budget deficits, with high levels of inflation all but guaranteed. FinCEN’s responsiveness to criticisms on their recent proposal indicates a willingness to work with the cryptocurrency industry and avoid driving transaction volume to foreign companies. Currently, all parts of the United States government are supporting the price of Bitcoin, and have given no indication that their positions will be changing in the near future.