Značka: US Government

U.S. Congressman wants to scrub bill provision that crypto advocates say is a potential disaster

North Carolina Representative Ted Budd submitted an amendment to the omnibus America COMPETES Act of 2022, specifically targeting the provision that would allow the Treasury Department to impose “special measures,” including surveillance and outright prohibitions, against “certain transmittals of funds.”As Cointelegraph reported, executives of crypto advocacy group Coin Center had earlier turned the spotlight on the provision, introduced by Connecticut Representative Jim Himes, that would scrap the existing checks — such as the requirement of public consultation and time limits on special measures orders — constraining the Treasury’s power to unilaterally prohibit financial transactions. If passed in its current form, the provision would deal a major blow not only to the cryptocurrency industry but to “privacy and due process generally,” as Coin Center’s executive director Jerry Brito stated.Republican Congressman Ted Budd echoed this argument in a statement that read:”The Treasury Department should not have unilateral authority to make sweeping economic decisions without providing full due process of rulemaking. This draconian provision would not help America compete with China, it would employ China’s heavy-handed playbook to snuff out financial innovation in our own country.”In a tweet that followed, Budd called the provision in question a “massive mistake.”Tucking new rules that could adversely affect the crypto industry into huge, “must-pass” pieces of legislation is a practice that first came into the spotlight last year with the appending, without public discussion, of a highly contentious definition of a “digital asset broker” to the Infrastructure Investment and Jobs Act later signed into law.The primary focus of the 2,912-page America COMPETES Act of 2022 is on remedying supply chain issues to keep the manufacturing and technology sectors of the United States internationally competitive. However, the sprawling bill also includes a host of seemingly unrelated measures and spending authorizations, including a ban on shark fin sales, steps against harassment in science and new liabilities for online marketplaces.

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U.S. Congressman calls for ‘Broad, bipartisan consensus’ on important issues of digital asset policy

In a letter to the leadership of the United States House Financial Services Committee, ranking member Patrick McHenry took a jab at “inconsistent treatment and jurisdictional uncertainty” inherent in U.S. crypto regulation and called for the Committee to take on its critical issues.McHenry, a Republican representing North Carolina, opened by mentioning that the Committee’s Democrat Chairwoman Maxine Waters is looking to schedule additional hearings addressing matters pertinent to the digital asset industry. He further stressed the need for identifying and prioritizing the key issues and achieving a “broad, bipartisan consensus” on the matters affecting the industry that holds immense promise for the financial system and broader economy.Citing the confusion that the industry faces due to the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission’s (SEC) competing claims for jurisdiction over digital assets, McHenry noted that neither of their positions is grounded in statute. Congress, he maintained, should not hand digital asset regulation over to regulatory agencies or courts, but rather step in to categorize the new asset class and lay down the rules governing it.Furthermore, Congressman McHenry suggested that the Financial Services Committee take a close look at the stablecoin report drafted by the President’s Working Group on Financial Markets (PWG) and examine the Federal Reserve’s position and future steps with regard to a U.S. central bank digital currency (CBDC).In December last year, the U.S. House Financial Services Committee hosted a crypto-focused hearing that featured a strong lineup of industry executives and was widely lauded as a massively productive exchange between policymakers and digital asset stakeholders.

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Lawmakers explore Bitcoin mining efficiency, broader crypto policy issues during Congress hearing

On Jan. 20, the Oversight and Investigations subcommittee of the U.S. Congress House Energy and Commerce Committee convened a hearing to investigate the environmental effects of cryptocurrency mining. Despite the narrow focus, the conversation that ensued – which many industry experts appraised as a meaningful educational experience for the lawmakers – touched upon a range of blockchain-related issues and themes beyond energy consumption. Here is how it went down, and what comes next.Witnesses set the frameFollowing the opening remarks, the hearing kicked off with the witnesses delivering their testimonies. Bitfury CEO Brian Brooks made a point that it was up to the market to decide on the most productive ways to use the already produced energy and maintained that proof-of-work (PoW) is the consensus mechanism that is best suited to produce true decentralization of a blockchain network.In contrast, Cornell Tech professor Ari Juels, while speaking favorably of blockchain technology and Bitcoin (BTC) in particular, maintained that proof-of-work is unnecessarily wasteful while the downsides of the alternative proof-of-stake, or PoS, mechanisms are largely theoretical.John Belizaire of Soluna Computing stated that Bitcoin’s energy consumption should be seen as a feature rather than a bug because crypto mining can create efficiencies by using the excess renewable energy. Steve Wright, a former general manager of a public utility district in Washington state, shared his experiences of interacting with crypto miners who flocked into the area due to abundance of cheap electricity, while former acting assistant secretary of the U.S. Treasury Gregory Zerzan introduced multiple uses of blockchain technology and said that regulatory uncertainty could hurt its development.Representatives then took to the floor with statements and questions. A few used their time for partisan attacks and political grandstanding, yet most made an honest effort to ask questions that either tackled the energy-related issues at the core of the hearing or sought broader context on the uses and potential applications of blockchain technology.Getting to the bottom of crypto miningCommittee chair Frank Pallone and Oversight Subcommittee chair Diana DeGette interrogated the witnesses on how wasteful crypto mining really is and how to make sure that communities do not bear the costs of energy consumption upticks caused by miners. Congresswoman Jan Schakowsky expressed her concerns about the use of fossil fuels to power mining rigs. Witnesses responded by reassuring the lawmakers of the overall green trend in which the mining industry is evolving, particularly in the U.S.Some Representatives sought to get a better understanding of the efficiencies generated by cryptocurrency mining in order to determine whether they justify the associated energy use. Congresswoman McMorris Rodgers inquired about the larger blockchain industry’s capacity to generate new jobs and protect user data.Florida Representative Neal Dunn showed off some advanced knowledge of Bitcoin economics when he asked Brian Brooks about the relationship between BTC halving and mining efficiency. Dunn also stated that the nation needs to produce more energy anyway, and powering innovative industries such as crypto mining is a good use of this growing capacity.Congressman Morgan Griffith explored the geopolitical aspect of Bitcoin mining, concluding with a supposition that China’s mining ban resulted not so much from energy efficiency concerns but rather from the Chinese government’s dislike of the idea of decentralization. The resulting exchange with Gregory Zerzan resulted in the witness stating that “Bitcoin equals freedom, and there are a lot of places in the world that don’t like freedom.”Industry receptionWhile the hearing did not come across as a massive breakthrough, most industry observers highlighted the educational component of the exchange, as well as its role in moving the policy conversation around crypto mining forward.In an interview with Cointelegraph after the hearing, witness John Belizaire said that the committee members’ readiness to thoroughly explore the complex matter at hand has rendered the discussion productive:”Chairwoman DeGett set the right tone from the very beginning, the tone of ‘we are here to learn.’ Representatives asked good questions and wanted to get educated on these problems.”Belizaire added that he was surprised by some questions related to the possibility of using less environmentally friendly energy sources to power Bitcoin mining in the future, saying that “You have to put it into the context of the global movement taking on climate change.”John Nahas, vice president of business development at Ava Labs, the company behind smart contracts platform Avalanche, noted that the hearing, having started slow, eventually evolved into a “meaningful conversation.” Nahas commented:”It’s clear to me that legislators are seeing the value of blockchains. It was refreshing to see that they understand the numerous areas, like health care records and energy management, that will make our lives more efficient and secure.”John Warren, CEO of U.S.-based Bitcoin mining company GEM Mining, said that the hearing was “an important step in educating U.S. lawmakers on the benefits of the rapidly growing cryptocurrency industry, and mining in particular.”Consonant with Belizaire’s testimony and some of the Representatives’ comments, Warren believes that the migration of mining activity into the U.S. is a favorable scenario in terms of reducing the industry’s environmental impact:”Greater oversight in America, coupled with ongoing innovation, will ensure U.S. companies lead the way in taking steps to operate as efficiently as possible and thereby further reduce mining’s environmental impacts.”Policy implicationsWhile nothing about this hearing was particularly groundbreaking, the effects of such interactions between Congress and the industry tend to compound. It is consequential that over time, elected officials across a varied set of specialized committees – and not only those engaged in financial oversight – get exposure to pro-blockchain industry rhetoric and arguments.In the near-term, however, this interaction shouldn’t be expected to result in any specific legislation.Ava Labs’ Nahas commented:”This was mostly informational and the early stages of any policy process. However, policymakers should continue to engage with experts and objective resources to better understand emerging blockchains and their ability to secure billions of dollars in value while consuming just a small fraction of proof-of-work chains.”Still, the arguments that were raised around decentralization, the dangers of overregulating the crypto space, and various efficiencies that blockchain technology can engender will stick with at least some of those who participated in the hearing, adding to their long-term policy vision.

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Former pro-crypto CoC Brian Brooks to testify in a House hearing on the energy impacts of mining

As the U.S. Congress prepares to take a thorough look at the energy use of crypto mining, the list of witnesses for the Thursday hearing contains more proponents of blockchain technology than its outright critics.The House Energy and Commerce Oversight Subcommittee announced a hearing on “Cleaning Up Cryptocurrency: The Energy Impacts of Blockchains” last week, with the event itself scheduled for Thursday. The focus of the hearing will be on the energy and the environmental effects of crypto mining, specifically as it relates to networks that use a proof-of-work, or PoW, consensus mechanism.A Committee on Energy and Commerce staff memo released on Jan. 17 revealed the list of witnesses invited to testify. Among the five experts on the list, only one — Cornell Tech professor Ari Juels — can be definitively categorized as an outspoken critic of Bitcoin (BTC) mining in its current form. Ironically, Juels is one of two authors of a 1999 paper that defined and introduced the term “proof-of-work.”Another entry on the witness list is Brian Brooks, former U.S. Comptroller of the Currency and Binance.US CEO who in Nov. 2021 joined BitFury, a major player in the crypto mining industry, as CEO. Also notable is the presence of John Belizaire, CEO of Soluna Computing, a firm that is focused on developing green data centers for batchable computing. In a Jan. 6 blog post, Belizaire lauded Bitcoin’s energy consumption as a “feature, not a bug,” arguing that it provides a viable mechanism for absorbing excess renewable energy.Utility providers will be represented by Steve Wright, a recently retired former general manager of the Chelan County, Washington state, public utility district. During his tenure, Wright took steps to attract cryptocurrency miners to the county.Gregory Zerzan, Jordan Ramis shareholder and former acting assistant secretary of the U.S. Treasury, once noted that concerns around Bitcoin mining could be addressed by “transitioning away from fossil fuels.”The memo itself offers a rather balanced overview of energy-related concerns associated with PoW mining, although it also reiterates certain statements that have been questioned by recent research. For one, the authors stated that the energy consumption and environmental impact of crypto mining may grow in the coming years — a claim that was countered in Bitcoin Policy Institute’s fact-checking brochure.Jake Chervinsky, head of policy at the Clockchain Association, tweeted that the memo was “not all bad, but commits basic errors.”The House E&C Committee published a 9-page memo for this week’s hearing on crypto’s energy use. It’s not all bad, but commits basic errors, like repeating the fallacy of “per transaction” carbon emissions.Read it here & watch Thursday at 10:30 am ET: https://t.co/AgMes2zOwf— Jake Chervinsky (@jchervinsky) January 18, 2022The hearing is scheduled for 10:30 am EST on Jan. 20 and will be streamed here.

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Early birds: U.S. legislators invested in crypto and their digital asset politics

According to some estimates, as many as 20% of Americans were invested in cryptocurrencies as of August 2021. While the exact number can vary significantly from one poll to another, it is clear that cryptocurrencies are no longer just a niche passion project for tech enthusiasts or a tool for financial speculation. Rather, digital assets have become a widespread investment vehicle with the prospect of becoming mainstream. Optimistic as that is, this level of mass adoption still does not enjoy a commensurate political representation, with senior United States politicians largely lagging behind the curve of crypto adoption. This makes the very narrow group of congresspeople who are also hodlers particularly interesting. As a lawmaker, does owning crypto, or at least having some crypto exposure, mean that you also vocally support the digital asset industry?According to “Bitcoin Politicians” — a crowdsourced data project aimed at tracking U.S. political figures’ crypto holdings using public financial disclosures — there are currently seven known crypto investors across both chambers of Congress. Here’s a closer look at the way their personal financial strategies are reflected, if at all, in their public political stances.Michael McCaulMichael McCaul, a 59-year-old Republican representative from Texas, holds the position of ranking member of the House Foreign Affairs Committee. He was also the fifth-wealthiest member of Congress in 2018. McCaul is known for his hawkish foreign affairs positions — vocally opposing the U.S. withdrawal from the Yemeni Civil War and supporting President Joe Biden’s airstrikes on Iranian-backed targets in Syria.In 2016, McCaul co-sponsored a bipartisan bill proposing a commission to study the debate over the use of encryption, including its potential economic effects. In recent years, the Texas lawmaker hasn’t been seen making any public crypto-related statements.Barry MooreA newcomer to the House of Representatives, Barry Moore is a staunch Republican from Alabama. In January 2021, he objected to the certification of the results of the presidential election and even got his Twitter account temporarily suspended for posts that echoed the claims of a “stolen election.” According to a public disclosure, Moore purchased between $1,000 and $15,000 worth of Dogecoin (DOGE) in June 2021 — an investment whose value has since dropped nearly 50%. The legislator also invested in Ether (ETH) (up to $15,000) and Cardano’s ADA (up to $45,000). Still, Moore hasn’t publicly expressed his opinions toward crypto. Marie Newman57-year-old Marie Newman, another new addition to the House of Representatives, is a Democrat from Illinois who is aligned with the progressive wing of the party. She is a proponent of abortion rights, gun control, a $15 minimum wage and the Green New Deal.Newman holds Coinbase shares as of December 2021, having purchased between $30,000 and $100,000 worth. She also registered the acquisition of more than $15,000 in Grayscale Bitcoin Trust shares. Newman hasn’t made any public statements about the crypto-related assets, but she is a member of the Congressional Blockchain Caucus, a bipartisan group working to promote a more relaxed regulatory approach to crypto that would allow the technology to flourish.Jefferson Van DrewA retired dentist with almost three decades of experience as a New Jersey legislator, Van Drew was elected to the House in 2018 as a Democrat but changed his colors in 2020, becoming a Republican. This comes as no surprise, as Van Drew was one of just two members of the Democratic party to vote against former President Donald Trump’s impeachment inquiry in December 2019. Still, he voted in line with Democrats 89.7% of the time during his tenure in the party. In a 2020 disclosure, Van Drew accounted for up to $250,000 in an investment trust operated by Grayscale, one of the larger digital-asset management firms on the market. At the time, the representative’s office declined to give the press any details about the exact nature of the investment, and Van Drew himself has remained silent with regard to digital asset-related policy issues.Michael WaltzYet another recent House electee, Michael Waltz — a retired army colonel and former Pentagon adviser — is the first ever Green Beret to serve in Congress. A Republican from Florida, Waltz maintains a warrior ethos with a pinch of Florida spice, having called for a full U.S. boycott of the 2022 Winter Olympics over the Chinese Communist Party’s treatment of the nation’s Uyghur population. Waltz also voted against President Biden’s $1.9-trillion economic stimulus bill and opposed the establishment of a commission to investigate the Jan. 6, 2021 attack on the U.S. Capitol.According to disclosures, Waltz bought up to $100,000 in Bitcoin (BTC) in June 2021, which makes him one of the few lawmakers to publicly own the original cryptocurrency, specifically. Nevertheless, on social media, the representative prefers to speak on foreign policy issues, and when he was asked about his crypto investment, he compared Bitcoin to gold in terms of serving as an inflation hedge. Waltz is also a member of the Congressional Blockchain Caucus.Cynthia LummisIn the case of Cynthia Lummis, a Republican senator representing Wyoming, her fame as a major crypto proponent probably comes before her credentials as a digital asset investor. A hardline Republican, Lummis was at one point the only female member of the conservative Freedom Caucus. In her January 2021 disclosure, Lummis — a member of the Senate Banking, Housing and Urban Affairs Committee — registered the purchase of between $50,000 and $100,000 in Bitcoin. The Senator revealed that her overall holdings amounted to some 5 BTC.Lummis certainly puts her mouth where her money is. For one, she famously compared the U.S. to Venezuela in terms of inflation, and she has stated she wants to launch a financial innovation caucus that would aim to “educate members of the U.S. Senate and their staffs about Bitcoin, its advantages, and why it is just such a fabulous asset to dovetail with the U.S. dollar.” Around Christmas 2021, Lummis revealed she was drafting a comprehensive bill that she plans to introduce sometime in 2022. In a tweet, Lummis asked voters to contact their senators to support the bill, stating that she was seeking bipartisan cosponsors. Pat ToomeyRepublican Senator Pat Toomey of Pennsylvania can be called the arch enemy of government spending (with a peculiar exception for charter school funding), having once proposed a budget plan with a $2.2 trillion tax cut. He also happens to be a strong supporter of banking deregulation. During the past year, Toomey emerged as one of the main public supporters of crypto in Washington. He criticized Senator Sherrod Brown’s plan to give up crypto regulation to executive agencies and urged Treasury Secretary Janet Yellen to clarify the language in the infrastructure bill around the tax reporting requirements for crypto. In December 2021, Toomey came up with his own set of regulatory principles, released ahead of a congressional hearing on stablecoins. In June 2021, he bought between $2,000 and $30,000 in shares of Grayscale’s Bitcoin and Ethereum trusts.Will the trend continue in 2022?The list of publicly crypto-friendly lawmakers grew significantly last year, and although not every hodler on the Hill dared to reinforce their investment with symmetric political statements, it is an important trend for the industry. As Chris Kline, co-founder and chief operating officer of cryptocurrency retirement investment provider Bitcoin IRA, told Cointelegraph:As more representatives invest in cryptocurrencies, I think lawmakers will begin to understand digital assets on a deeper level, leading to a more informed and detailed crypto policy that will benefit investors on every level.Eric Bleeker, analyst and general manager at investment firm The Motley Fool, also stressed the importance of the knowledge-enhancement side of lawmakers’ crypto exposure:You definitely have to view those investments as beneficial for the industry. Did Visa receive worse legislation after Nancy Pelosi invested in its IPO? At the end of the day, crypto can be seen as a ‘threat’ by governments — we’ve already seen it outlawed in China. Having legislators own it adds to knowledge of the industry.Kline also believes that the growing number of politicians invested in crypto will inevitably convert to active support, both verbal and legislative. With new concepts like the Metaverse, nonfungible tokens (NFTs) and digital banking steadily conquering the attention of society, there is no reason for society’s representatives to not follow these trends.In Kline’s opinion, this will require legislators’ understanding of the deep complexities and nuances of cryptocurrencies and blockchain: “I see 2022 as the year legislators consider the potential of digital assets and another step in their widespread adoption.”Bleeker expects more U.S. legislators to get into the crypto game in 2022 for a simple reason: “Right now, they’re tremendously underinvested.” Bleeker noted that as of 2018, the median net worth of congresspeople was $1 million, with 10 senators having a net worth of over $30 million. It’s true that some legislators may avoid crypto for political reasons, but just by looking at the numbers, more crypto ownership from lawmakers can be expected from a pure portfolio diversification standpoint.The hope is that more investment in crypto by lawmakers will come with better understanding of this asset class and more political support.

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Law Decoded: Looking ahead to 2022, Jan. 3–10

As Alex Tapscott put it, 2021 was the year when many governments and lawmakers began to finally wake up to the transformational potential of blockchain technology. Indeed, crypto’s global mainstreaming and growing market capitalization have made it difficult for the agents of power to ignore it and have rendered it a salient economic, social and political issue across many key jurisdictions. By all appearances, we are in for a busy year in crypto regulation and policymaking.Stablecoins, an asset class that attracted a fair amount of regulatory attention in 2021, will surely remain in the hot seat this year. For most nations, stable-value crypto assets will represent competition to their sovereign digital currencies. For the United States, a key question is whether Congress will come forward with the legislation around stablecoins that the President’s Working Group on Financial Markets is calling for.It will also be exciting to watch how far the crypto industry’s political mobilization and lobbying efforts — something that became a prominent feature of the crypto policy landscape in 2021 — will be able to reach this year. A major test of the sector’s newfound political clout will be the struggle to amend the crypto-related provisions of the recently passed infrastructure bill.Many industry experts surveyed by Cointelegraph expect major policy advancements to come from the European Union in 2022. The European Commission is currently reviewing the proposed Markets in Crypto-Assets regulation, a wide-reaching framework that is mainly focused on mitigating consumer and financial stability risks associated with the adoption of digital assets. Combined with digital euro trials being well underway, this suggests that the EU could soon articulate its stances on various interconnected parts of the digital asset ecosystem — CBDCs, private stablecoins and decentralized cryptocurrencies — in a more definitive fashion.Elsewhere in the world, El Salvador maintains the perception that it is all in on Bitcoin (BTC) as a nation-state. One of many points of contention related to this great experiment has been, and will continue to be, the Central American nation’s spat with global financial organizations such as the International Monetary Fund. Speaking of the global watchdogs, it is reasonable to expect that these guardians of the incumbent financial order will start delving deeper into specific sectors of the crypto space, much like the Bank of International Settlements’ recent foray into decentralized finance. The hope is that the resulting alarmist narrative will not become global regulators’ dominant approach to the sprawling domain of DeFi.The first days of 2022 also brought a reminder that regulatory clarity is not the only way in which politics can massively affect the crypto space. Following days of civil unrest in Kazakhstan — a nation that had climbed to the No. 2 spot in the world’s Bitcoin hash rate rankings following China’s mining ban — the government’s decision to cut off the entire population’s internet access resulted in an unprecedented hash rate drop on the Bitcoin network. The geopolitics of BTC mining, which came into motion last year with China’s abrupt exit, seem poised to continue on the path of volatility.All in all, this year is shaping up to be a rollercoaster of Bitcoin politics, crypto regulation and digital currency adoption.  Let’s buckle up and see what else 2022 has in store.

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President Bukele predicts Bitcoin $100k rally, further legal adoption and more

Last year, El Salvador became the first country to adopt Bitcoin as legal tender under Bukele’s presidency as a countermeasure to the growing inflation in the country. Since legalization, the president acquired 1,370 BTC for the country’s reserve and reinvested its unrealized gains into new infrastructure projects including a hospital and a school.President Bukele predicted that two more countries will join El Salvador to adopt Bitcoin as a legal tender in 2022. In the same year, he expects a bull run that will take BTC price to a new all-time high of $100,000.On Jan 2, El Salvador President Nayib Bukele shared five bullish predictions on Bitcoin’s (BTC) performance for the year 2022. 2022 predictions on #Bitcoin:•Will reach $100k•2 more countries will adopt it as legal tender•Will become a major electoral issue in US elections this year•Bitcoin City will commence construction•Volcano bonds will be oversubscribed•Huge surprise at @TheBitcoinConf— Nayib Bukele (@nayibbukele) January 2, 2022Bukele also envisions an oncoming explosive growth for El Salvador’s two in-house BTC-based initiatives — Bitcoin City and Volcano bonds. As Cointelegraph previously reported, the president foresees Bitcoin City to become a fully functional city with residential areas, shopping centers, restaurants, a port, “everything around Bitcoin.”According to Bukele, “Bitcoin City will commence construction” this year, implying the development of the $1 billion BTC bonds-backed virtual city. Along with this development, he predicts an oversubscription of the Volcano bonds. Bukele also predicts that Bitcoin will become a major electoral issue in U.S. elections this year and told his Twitter followers to be on the lookout for “a huge surprise” at Bitcoin 2022 conference.This tweet will age well — Nayib Bukele (@nayibbukele) January 2, 2022

Related: Some Salvadorans claim funds are missing from their Chivo walletsEl Salvador’s mainstream Bitcoin adoption met with a series of technical hurdles, the latest being reports of missing funds from the country’s in-house Bitcoin wallet, Chivo. As Cointelegraph reported, at least 50 Salvadorans reported losses totaling more than $96,000 in December, due to an alleged unknown glitch in the Chivo wallet.Hilo con algunos afectados por la Chivo Gualet.1- $16,000 pic.twitter.com/EC3hehXKDz— El Comisionado (@_elcomisionado_) December 18, 2021

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How the Democratic Party didn’t stop worrying and fearing crypto in 2021

As 2022 is kicking off, America nears the first anniversary of Joe Biden’s presidency. Following the tenure’s ambitious start, the last few months witnessed some serious tumult around the overall health of the United States economy, the administration’s handling of the COVID-19 pandemic, and the tense debate around Biden’s opus magnum — the $1.7 trillion Build Back Better infrastructure legislation plan.But even as the Democrats’ ability to maintain undivided power after the 2022 midterm elections can raise doubts, the party’s prevailing view of crypto has become more consolidated than ever. The incumbent president’s party will be setting the tone of the regulatory discussion for at least three more years, so a thorough look at the fundamental premises and potential directions of its emerging crypto stance is in order.The narrative arcThe path that mainstream Democrat thinking on crypto has traveled over the last three years is perfectly captured by an anecdote featuring two crypto-related public statements made by a Clinton. One is by the 42nd U.S. president, Bill Clinton, then 72, who said at Ripple’s Swell Conference in October 2018 that the “permutations and possibilities” of blockchain were “staggeringly great”. Three years later, speaking at the Bloomberg New Economy Forum in Singapore, Bill’s wife and ex-presidential candidate Hillary Clinton, though calling the cryptocurrencies an “interesting” technology, warned about their power to undermine the U.S. dollar and destabilize nations — “perhaps starting with small ones but going much larger.”This startling difference in opinion within the power couple reflects the recent evolution of the Democratic party, itself — from a “third way,” business, tech and finance-friendly centrism of its 1990’s generation to the newfound statism with a heavy emphasis on redistributional justice and big government projects. By current standards, the former first lady sounded rather balanced in comparison to her party comrade Senator Elizabeth Warren, who has famously lashed out at the crypto market after the volatility outburst in early September: Advocates say crypto markets are all about financial inclusion, but the people who are most economically vulnerable are the ones who are most likely to have to withdraw their money the fastest when the market drops. […] High, unpredictable fees can make crypto trading really dangerous for people who aren’t rich.Warren berated crypto on numerous occasions, calling it a “fourth-rate alternative to real currency” that is “unsuitable as a medium of exchange;” a “lousy investment,” that “has no consumer protection;” and a tool that makes many illegal activities easier.Beyond Senator WarrenThe negative sentiment is largely shared by Senator Sherrod Brown, which is arguably even more unsettling given his status as chairman of the U.S. Senate Committee on Banking, Housing, and Urban Affairs. Brown’s opening statements at Congress hearings have never been amicable towards crypto. Their overall spirit can be summarized in the introduction that opened the July hearing entitled “Cryptocurrencies: What are they good for?”All of these currencies have one thing in common — they’re not real dollars, they’re not backed by the full faith and credit of the United States. […] And that means they all put Americans’ hard-earned money at risk.Brown blamed the “cottage industry of decentralized financial schemes” for an attempt to create “a parallel financial system with no rules, no oversight, and no limits,” calling it “a shady, diffuse network of online funny money,” with nothing democratic or transparent about it. The lawmaker repeatedly rejected the notion that crypto could be an alternative to legacy money — last time at a December Congress hearing:Stablecoins and crypto markets aren’t actually an alternative to our banking system. […] They’re a mirror of the same broken system – with even less accountability, and no rules at all.It’s not all dark, though. One figure that represents a more moderate, if not pragmatic approach to crypto — Congresswoman Maxime Waters — would also play a major role in any future outcome for the industry. As a chairwoman of the House Committee on Financial Services, she initiated the Digital Assets Working Group of Democratic Members with a mission to ensure responsible innovation in the cryptocurrency and digital asset space and “meet with leading regulators, advocates, and other experts on how these novel products and services are reshaping our financial system.”Related: Lines in the sand: US Congress is bringing partisan politics to cryptoSen. Waters has publicly recognized that “Americans are increasingly making financial decisions using digital assets every day,” and affirmed that her Committee will explore “the promise of digital assets in providing faster payments, instantaneous settlements and lower transaction fees for remittances.” What’s it all about?The good news is that underneath the redoubtable oratory, there is a keyword: regulation. It is clear, at this point, that a China-style total war on crypto isn’t an option in the U.S. Therefore, what drives the heated activity of congressional committees and federal agencies in recent months is a clear intention of the Democratic establishment to sort out the rules of the game before the next presidential election. Part of this effort of the Biden administration is the launch of the President’s Working Group on Financial Markets, a superhero team composed of the SEC, CFTC, OCC, FDIC and Federal Reserve System executives, with the secretary of the Treasury Department leading the group. So far, the key product of the Working Group is a 26-page report on stablecoins, which advises Congress to designate some stablecoin-related activities — such as payment, clearing and settlement — as “systemically important” (which would inevitably lead to a tighter oversight) and limit stablecoin issuance to insured depository institutions, i.e., banks.As in the pre-Biden era, the main problem lies with the core classification of digital assets. The PWG report failed to propose a novel interpretation and give precedence to a single regulatory body, thus perpetuating a situation where a variety of regulators oversee different types of crypto-related activity.In October, Rostin Behnam, the chairman of the Commodity Futures Trading Commission and a member of the Democratic Party, claimed that as much as 60% of digital assets can be classified as commodities, which amounts to proposing that the agency become the lead U.S. cryptocurrency regulator. He also further stated that his agency, as well as the Securities and Exchange Commission, would likely need “a regulatory structure for both securities and commodities.” How exactly that would help the ongoing patchwork approach to regulation is still a mystery. The Democratic causeThere are several reasons to believe that the largely proclamatory activity of 2021 will be followed up by some real action in the following year. The first is the general idealistic mindset of U.S. Democrats. For example, the drive to aggressively regulate Big Tech is part and parcel of this mindset. While President Barack Obama and some regulators worked alongside Google and Twitter to facilitate the growth of internet businesses, Joe Biden’s administration came to power amid the wave of popular anxiety over international cyberattacks, personal data leaks, Meta’s crisis mismanagement and the overall outsize influence on the political process accumulated by tech goliaths. While Meta and Google have been fighting federal and state regulators in courts over allegations of anticompetitive conduct for a while, Biden’s team also pledged to hold tech companies to account for toxic speech they host and strengthen policing anti-competitive practices. However, in 2021, we haven’t witnessed any significant policy steps in this direction. Neither of the two major legislative proposals — Amy Klobuchar’s bill, which ​​would bar big tech platforms from favoring their own products and services, and a bill by House Democrats that seeks to remove some protections afforded tech companies by Section 230 of the Communication Decency Act — has become law. The second reason behind the Democratic rush to put crypto within the regulatory perimeter is pragmatic: The Biden administration and its allies on Capitol Hill need money. Biden’s first-term agenda relies heavily on ambitious Roosveltian infrastructure projects. While the $1.2 trillion Infrastructure Investment and Jobs Act managed to get bipartisan support and was signed into law on November 5, the Build Back Better Act, which now hangs by a thread after Democratic Sen. Joe Manchin had announced his opposition to the current draft, would cost nearly $2 trillion. By some estimates, should it make it to the president’s desk, the spending program would increase the deficit by $360 billion over 10 years, making it urgent to raise more tax revenue. This is what makes a thriving crypto industry an important battlefield for Democrats, who see the possibility of harvesting some cash from it and an urgency to prevent tax evasion via digital tools. What’s next?There’s no doubt that the Biden administration will continue to pursue a strict regulatory agenda in 2022. We will see more Congressional hearings next year, but even more consequential negotiations will be taking place behind closed doors, where Democrats will have to finally decide whether the SEC, CFTC or any other body should dominate crypto oversight. Despite Sharrod Brown’s recent “with or without Congress” remarks, it is also hard to believe that Republicans will let their opponents single-handedly decide the fate of the industry.

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Reelected Miami mayor to take 401k retirement savings partly in Bitcoin

The long-standing mayor of Miami Francis Suarez has now announced plans to take a part of his 401(k) payout in Bitcoin (BTC) just a month after he started receiving salary in BTC. Soon after becoming the first United States lawmaker to accept a part of his salary in Bitcoin, Suarez wants to dedicate a part of his retirement savings to Bitcoin based on “a personal choice,” he said in an interview with Real Vision:“I just think it is a good asset to be invested in. I think it’s one that’s obviously going to appreciate over time. It’s one that I believe in.”Suarez highlighted that Bitcoin’s success is tightly tied to the confidence in the system, which is inherently an “open-source, un-manipulatable system”. The mayor revealed that he has started receiving salary payments in Bitcoin through the help of a third-party payment processor Strike.The mayor also shared that the city government accepts fee payment in Bitcoin from Miami residents. While the Mayor explores the various options for enabling the Bitcoin payments for retirement savings, Suarez is certain to establish a relevant system by 2022. Thank you Governor DeSantis for following Miami’s lead and welcoming crypto innovation and companies into Florida! Now it’s your chance to take the lead as Governor and take your next paycheck in Bitcoin… @RonDeSantisFL you in? https://t.co/Zppp8DCiMe— Mayor Francis Suarez (@FrancisSuarez) December 9, 2021Related: Miami will hand out free Bitcoin to residents from profits on city coinIn an effort to further drive Miami’s Bitcoin adoption drive, Mayor Suarez announced on Nov. 12 to give Bitcoin yield as a dividend directly to every eligible Miami resident. As Cointelegraph reported, the city of Miami will divide and distribute the BTC yields to residents earned by staking its in-house cryptocurrency, MiamiCoin, which was initially launched by Citycoins to fund municipal projects by generating yield. In a bid to transform the city into a major cryptocurrency hub, Suarez said:“We’re going to create digital wallets for our residents. And we’re going to give them Bitcoin directly from the yield of MiamiCoin.”

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Point of no return? Crypto investment products could be key to mass adoption

The first Bitcoin (BTC) futures exchange-traded fund (ETF) was launched in the United States back on October 19, 2021. Since then, a number of other cryptocurrency investment products have been launched in various markets.That first ETF, the ProShares Bitcoin Strategy ETF, quicklybecame one of the top ETFs of all time by trading volume on its debut, and soon after, several other Bitcoin futures ETFs were launched in the United States, providing investors with different investment options.To Martha Reyes, head of research at cryptocurrency trading platform Bequant, these options are important. Speaking to Cointelegraph, Reyes pointed out that in traditional finance, ETFs have “proved to be incredibly popular in recent years, with ETF assets expected to reach $14 trillion by 2024.”Reyes said that investors who have been on the sidelines of the market may now choose to invest in cryptocurrencies if they prefer the “low cost, flexibility and convenience [of ETFs], especially as they then do not have to custody the crypto themselves.”Custodying crypto assets, Reyes said, can prove a “technical barrier to some non-crypto natives.” The launch of crypto ETFs may offer investors the type of diversification they want in their portfolios through crypto, although some may want to access the market “via baskets reflecting different trends in this rapidly evolving market.” She added:“Others prefer to be more hands on or have a combination of strategies. The important thing is that investors have options.”Several options have, in fact, been launched over the last few weeks. United States-based firm WisdomTree has listed its cryptocurrency exchange-traded product (ETP), Crypto Mega cap Equal Weight ETP, on Euronext exchanges in Paris and Amsterdam.Trading under the ticker symbol MEGA, the product is backed by physical cryptocurrencies including Bitcoin and Ether (ETH) and is rebalanced quarterly.WisdomTree also launched its WisdomTree Crypto Market (BLOC) and WisdomTree Crypto Altcoin (WALT) ETPs in Europe.Similarly, in December, Bitcoin Capital AG released two ETPs on the SIX Swiss Exchange, offering investors exposure to Bitcoin and Ether. These products are actively managed by FICAS AG and are available to institutional, professional and private investors.These products have so far been successful and more options are being launched on a regular basis, effectively boosting investors’ options in the market. To some experts, these products are part of the next step cryptocurrencies need to take to be widely adopted.Investment products and adoptionTo Reyes, participation in these investment products is so far “primarily institutional,” especially in countries like the United States in which only futures products are trading. She said that retail investors “are cognizant of the added rollover costs of a future versus a spot ETF, meaning underperformance versus the underlying.”Reyes added that for “wide retail participation, we would probably need to see a spot product.”Speaking to Cointelegraph Sui Chung, CEO of FCA-regulated crypto indices provider CF Benchmarks, said that cryptocurrency investment products are “significant drivers of mass adoption,” and while the firm would “like to see a wider choice of avenues” the impact of these products could still be significant:“We shouldn’t underestimate the impact these products have in bringing new investors and capital to crypto assets and how this can accelerate long-term adoption.”Karan Sood, CEO and managing director at Cboe Vest, an asset management partner of Cboe Global Markets, told Cointelegraph that increased participation from a diverse set of investors is “good for the market,” as it “increases liquidity and helps build out the market infrastructure.”Sood said that before investing, investors should review their possibilities carefully as some products were initially launched to provide investors access to the cryptocurrency market, while others “try to provide a solution to Bitcoin’s extreme volatility problem.”According to Sood, volatility is “endemic to the crypto asset space,” and sell-offs in which Bitcoin and other crypto assets lose over half of their value are fairly common, so much so that drops of over 20% are to be expected. He added:“However, what is new is the availability of funds that allows investors to access Bitcoin exposure with strategies designed to reduce the impact of severe sustained declines.”These funds, he said, take the “managed volatility set of investment strategies extensively used in conventional asset classes” and apply them to Bitcoin futures to protect investors against the cryptocurrency’s volatility.This volatility is believed to be keeping some institutional investors on the sidelines and stopped regulators like the U.S. Securities and Exchange Commission (SEC) from finding ways to properly protect investors and accommodate for the innovation in the space.To Chung, the cryptocurrency market has matured to the point there are now “core” exchanges like Coinbase and Kraken that ensure fair and manipulation-free trading, so market manipulation should not be a problem. Regulated products are, nevertheless, preferable for institutions and more conservative investors.Considering the lack of a spot Bitcoin ETF in the U.S. and the disadvantages of futures-based products mentioned by Reyes above, retail investors are left either gaining exposure from other markets or buying crypto directly. These options are, nevertheless, not optimal for some.Early stages for crypto investment productsBuying cryptocurrencies on the spot market has been the go-to strategy for most crypto investors over the last few years, but more conservative investors who may want to diversify their portfolios may be uncomfortable with the lack of regulation in the market.As Cboe Vest’s Sood put it, when compared to the “trading and custody infrastructure that exists for conventional assets such as stocks, bonds and funds, there is little in the form of regulation.” This lack of regulation, he said, has been “exemplified by the persistent news about the loss of keys, hacking of systems and fraud in trading in crypto assets.”Bitcoin futures investment products operate under the Commodity Futures Trading Commissions’ regulations, while mutual funds with exposure to Bitcoin are actively managed by regulated entities with a rich history of providing strong investor protections.Taking into account these differences, Sood pointed out that “unless there is a change in the regulation of spot Bitcoin, there is a sound basis for BTC futures-based investments but not for spot-based investments.”Notably, spot Bitcoin ETFs are available in various jurisdictions. In December, Fidelity Canada launched one such product called the Fidelity Advantage Bitcoin ETF. It trades on the Toronto Stock Exchange and is denominated both in Canadian and United States dollars.Sood said that regulations in the U.S. may be a burden for investment product manufacturers but have “delivered substantial value and protections to U.S. investors over the years.” These protections, he said, have “stood the test of time over decades” and, as such, investors should opt for products regulated in the country if possible. While futures-based investment products may not be optimal for retail investors, Sood argued that some sophisticated products have been launched to offer investors the cryptocurrency exposure they may be looking for. He concluded:“Investing in funds overseas may expose U.S. investors to undue unique risks and tax burdens.“Bequant’s Reyes pointed out that cryptocurrency ETFs have less than $20 billion in assets under management across 50 products, which means we are “still in the early stages of the adoption” of these products.Nevertheless, she sees the approval of a futures ETF and rejection of a spot ETF as “inconsistent,” as in other jurisdictions, spot ETFs are already being traded. Making matters worse, a futures product “primarily benefits institutional investors as it is too expensive for individual investors.Grayscale Investments has notably fired back at the SEC for rejecting VanEck’s spot Bitcoin ETF application, issuing a letter arguing the SEC is wrong to reject such products after approving several Bitcoin futures ETFs.CF Benchmarks CEO Sui Chung said that while futures products are regulated instruments with oversight from the CFTC, it “isn’t so clear cut for spot Bitcoin,” and the SEC has a challenge in balancing its enforcement mandate with what U.S. investors want.However, Chung noted that Bitcoin futures ETFs have already “sparked an irreversible change” as they are available “to every single member of the investing public in the world’s deepest capital market.”Markets, he said, haven’t experienced significant disruptions and “the sky hasn’t fallen in,” meaning that we “have passed the point of no return.” To Chung, firms who can offer investors ETFs that can help diversify and grow their portfolios “will be the winners.”Making crypto more accessibleA Bitcoin spot ETF could make cryptocurrencies more accessible but to the above experts, the crypto ETF is about more than a product with physical exposure — it’s about making cryptocurrency exposure more accessible.To Reyes, futures ETFs trading in the U.S. are a “trial run in eventually approving a spot ETF.” Such an ETF, she concluded, would be greatly beneficial:“A spot Bitcoin ETF would fuel mainstream retail adoption of Bitcoin further. Some investors prefer the ease of accessing the market this way rather than through dedicated crypto exchanges.”Reyes welcomed regulation, noting that the more regulated fiat-to-crypto on-ramps there are the better, as these platforms can help signal regulatory concerns are easing, further driving up demand for cryptocurrencies.Chung said that cryptocurrency investment products can lead to mass adoption by ensuring that investors deal with less friction when entering the market, as it may be easier to buy an ETP via an existing brokerage account than to open an account at a cryptocurrency trading platform:“We don’t want to be dogmatic about how people invest and learn about crypto and its possibilities, our job is simply to open up as many avenues as possible and drive adoption.”While it isn’t clear when the SEC will approve a Bitcoin spot ETF or whether existing solutions are enough for more conservative investors to make a move, new investment products are making it easier for investors to gain exposure to the space.Over time, the trend should continue and new products will launch, allowing cryptocurrencies to fully develop in the market as a new asset class that could help hedge against inflation or economic downturns.

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