White House’s executive order for crypto is a ‘watershed’ event

This is the web version of The Ledger, Fortune’s weekly newsletter covering financial technology and cryptocurrency. Sign up here to receive future editions.

Call it the latest sign from Washington that the complicated world of crypto will be handled similarly to traditional finance—that is, slowly and steadily. The order, which dropped Wednesday, contained none of the sweeping proclamations that some had feared. Rather, it was almost exactly what it was always bound to be. The order directs a mix of government agencies and departments, from the Treasury to the Attorney General to the Consumer Financial Protection Bureau, to study the state of the almost $2 trillion crypto market. It would be done while keeping an eye on hot button issues involving crypto: its impact on the climate, financial stability, investor protection, and national security.

“It’s for sure a watershed moment,” Kraken chief legal officer Marco Santori tells Fortune about the executive order. “It’s also one that’s been anticipated [and] planned for. … Executive orders like this happen in this country whenever matters become as notable as crypto has become. Does the ecosystem benefit from the executive order? Time will tell.”

Make no mistake, the action carries plenty of weight. 

Labeled as the administration’s push to create a “first whole-of-government strategy” for cryptocurrencies, the order promises to finally establish a unified government approach to the sprawling cryptoverse, something the industry has long called for.

“We live in a world where approaching 20% of Americans have invested in or traded or used cryptocurrencies,” a senior administration official said during a press briefing ahead of the order’s release. “This is not a niche issue anymore. And it’s profoundly important that we have the right tools to mitigate the risks to consumers, to investors, and, frankly, to the entire financial system.”

So far, the executive order has been met with praise by the industry. Circle CEO Jeremy Allaire equated the resulting moment to “the government wakeup to the commercial internet” in the mid-1990s. Kristin Smith of the Blockchain Association wrote that it’s a “major milestone” for the industry. And Kathryn Haun, a venture capitalist, took to Twitter to say the order is “a step in the right direction for some American leadership in web3 and could bring order to what’s become a sorely fragmented regulatory landscape.”

But the order is just that, a step—not the end goal. It’ll be months before details begin to emerge about the resulting government studies and reports.

“The administration made it clear that they are willing, if not eager, to engage on some of the central questions around digital assets,” says Isaac Boltansky, director of policy research at BTIG. “It doesn’t mean that the industry’s going to get the answer it wants.”

Put differently, by Boltansky: “It’s classic D.C., right? The truth’s somewhere in the murky in-between.”

Speaking of homework… In The Ledger’s return last week, we asked for some feedback on our beloved newsletter—so thank you to all of you who have already done so. For those of you who haven’t, well, there’s still time to take the survey. It should only take a few minutes!

Need to know about the latest crypto, finance, tech, business news? Look no further, Fortune has it all. You can even subscribe for 50% using my promo code “HARTY22.”

Declan Harty
@declanharty
Declan.harty@fortune.com

DECENTRALIZED NEWS

Credits 🚀 

Binance‘s recent purchase of Forbes isn’t the crypto exchange’s only deal in traditional business… Sen. Ron Wyden, a Democrat from Oregon, is warning fellow lawmakers about the consequences of cracking down too hard on crypto… Bain Capital has joined the growing line of investment firms launching crypto funds… FTX-owned LedgerX is looking for regulators’ sign-off on a plan to begin clearing margin-based retail trades… Chainalysis has launched a new smart contract to identify crypto wallets that fall under sanctions, like those being placed on Russia… Payments giant Stripe is opening its services to crypto companies… Blockchain infrastructure company Paxos can now offer its products and services to customers based in Singapore after landing in-principle regulatory approval from the Monetary Authority of Singapore.

Debits 🐻 

Following a small gain following the release of the White House’s executive order, crypto prices were back on the slide downward Thursday afternoon… Bitcoin has tumbled about 5% over the past 24 hours. Ethereum is down more than 2%. And Cardano, Solana, and Avalanche are all trading lower by some 3% or so… U.S. lawmakers like Rep. Brad Sherman and Sen. Elizabeth Warren are displeased that crypto companies are still offering their services to users in Russia… A brother and sister with the last name Barksdale (The Wire, anyone?) who were behind Ormeus Coin were charged in an alleged $124 million crypto fraud operation.

FOMO NO MO

“Wall Street isn’t sexy anymore.” Not too long ago, investment banker, bond trader, whatever it might be were the hottest jobs in old finance. Then came Big Tech. And now? Crypto, which is attracting droves of traditional finance professionals, as my colleague, Anne Sraders, wrote earlier this week. 

From the article:

In April of 2021, Darren Langer decided to make a bet on what he believed to be a “massive evolutionary shift” underway.

Langer was working as a managing director at investment firm BTIG, collaborating with clients like hedge funds, and had noticed that for years, achieving above-market returns on the Street was becoming increasingly challenging. But after reading some of BTIG’s own research reports about crypto and blockchain technology, Langer says that, like in the early booming days of hedge funds, “it just became very clear to me that this was kind of history repeating itself in terms of digital assets [being] the single best investable universe for alpha generation for the next 10 years, in my mind,” he told Fortune. “In fact, I’ve never seen something more clearly in my entire career.” In April, he took a job as head of institutional investor relations and business development at crypto investment firm Arca.

Langer is one example of the shift that’s taking place in finance, something that happens every couple decades, where the hallowed halls of mainstream financial institutions start to pale in comparison to a new, fast-growing promised land. It’s similar to the Dot Com boom and the Silicon Valley era, experts say, and these days, some “who are a part of that generation that lived through the financial crisis, now they’re looking at crypto and digital assets and saying, ‘Okay, I missed the Silicon Valley wave, or I wasn’t part of that wave—this is the new wave and I want to have skin in the game,’” says David Richardson, a partner at executive search firm Heidrick & Struggles who focuses on areas like crypto. He notes the firm has seen a “torrent of interest” in the past year from people from more traditional backgrounds including Wall Street.

BUBBLE-O-METER

5 days

Hybrid and remote work have become commonplace in the age of the pandemic, stretching from Silicon Valley to Washington, D.C. On Wall Street, though, Goldman Sachs CEO David Solomon is unfazed in his mission to get the investment banking giant’s thousands of employees back into the office, five days a week, Fortune‘s Geoff Colvin writes in a new profile on Thursday. It seems like the crypto world—see above—may have yet a new pitch to potential recruits.  

THE LEDGER’S LATEST

Meet the ‘King of Bitcoin Mining’—an ex-landscaper who is building crypto’s promised land in Texas by Shawn Tully

Bitcoin bust. Inflation fears send cryptocurrencies tumbling by Chris Morris

South Korea elects new Bitcoin-friendly president, who blames feminism for low birth rates by Eamon Barrett

Coinbase blocks 25,000 crypto wallets tied to Russians suspected of illicit activity by Marco Quiroz-Gutierrez

Bored Apes and CryptoPunks help jolt NFT market to over 21,000% growth and $17.6 billion in sales last year by Marco Quiroz-Gutierrez

‘This has never happened before in the history of the nickel market’: 145-year-old exchange halts trading as price more than doubles by Will Daniel

What is a stock split? Here’s how it impacts your investments by Lee Clifford

Credit Suisse was caught trying to shred evidence of Russian loans backed by yachts. They just revealed they’ve given $1.7 billion to the country’s borrowers by Tristan Bove

(Some of these stories require a subscription to access. Thank you for supporting our journalism.)

MEMES AND MUMBLES

Cue the Without-Me-Eminem-2002. Guess who’s back? LimeWire, the music platform of the early aughts that was a hit among cheap millennials before being shut down for its inadvertent role in helping users commit copyright infringement. That’s right. A duo of entrepreneurs in Austria have bought the rights to LimeWire, and plan to revamp it for the next iteration of the web by selling, what else, NFTs.