Among developed nations, cryptocurrency is most widespread used among english speaking countries, with the United States first, followed by UK, Canada, South Africa, and Australia.
How is America’s economic state today?
Good news, post-pandemic America has been dealing with intense supply chain disruptions and political unrest pretty well. The US has seen growth in key economic indicators. GDP has grown, millions of jobs have been added to the market, unemployment has decreased, and average hourly earnings have grown.
With a new administration taking office in the beginning of 2021, we are seeing the effects of new fiscal and monetary policy in 2022 as two consecutive quarters of a negative GDP, meaning that America is in a recession.
Current events in the US 👇 👇 👇
Crypto
With every form of a civilized currency system, the United States has always found itself as a key influencer of the system. When cryptocurrency started gaining notoriety, the US had some serious concerns toward crypto innovation that could threaten the pre-existing financial system.
Crypto ownership levels are higher among the very wealthy (different from developing countries). 70% of users have an annual income above $1 million USD. Majority of the owners are also in the 18-44 age group, and there are almost double the amount of male users than women. Thus the average American cryptocurrency user is a young, tech savvy, wealthy male.
The US also has the largest distribution of traders on major crypto exchanges.
Why are American People Investing in Crypto?
As of August 23, 2022, studies show that about 16% of US adults say they have invested, traded, or used a cryptocurrency. Here is a breakdown of why they chose to delve into cryptocurrency:
Overall, most American cryptocurrency users state that they use it to diversify their portfolio. It is interesting to see how developed countries use cryptocurrency as way to make money and as a leisure investment, while developing countries use cryptocurrency to garner financial security and conserve and maintain their money.
Problems/Success
Issues
Contract Law: Since contract law varies from state to state, the government cannot express legal validity, which makes it nearly impossible to deal with crypto fraud in court.
Jurisdiction: Since there is no way to pinpoint where a ledger’s location is due to blockchain technology, any regulator would find issues with enforcing laws. This is an issue that both developing and developed nations deal with.
Theft/Fraud/Laundering: Due to the anonymity and privacy, cryptocurrency can instigate more black market crimes, and other illegal activities. Criminal organizations now can scale up their financial schemes.
Tax Implications: American citizens have to properly report the prices that they had bought and sold their cryptocurrencies. With extreme fluctuations it becomes quite burdensome.
Success
Socioeconomic Equilibrium: Marginalized citizens are more likely to invest in cryptocurrency than stocks. Essentially promotes financial inclusion.
Force Innovation: Blockchain technology can support new services and create more competition in the financial services sector.
Real-Time Payment: Cryptocurrency overcomes one of the biggest shortcomings in the US payment system - slow payments.
Small Business: Banks consider small business a riskier investment, and encounter challenges in access credit. Blockchain technology can accelerate small business growth using real-time, and low-cost payments.
Well What Does the Government Think?
In late September 2022, the Treasury Department’s Financial Stability Oversight Council released a report on digital assets. The council essentially advocated for tighter legislation regarding crypto.
According to the report, crypto assets comprise about 1% of global financial assets and the increase in popularity results in criminals taking advantage and manipulating the markets. Arguably, this trend is prevalent in any institution that encounters massive growth in a short period of time. Legislative actions take a longer time than innovation within the cryptocurrency space.
Policy makers are often making a tradeoff between protecting Americans from inflation or protecting the governments ability to regulate DeFi.
