U.S. Congress shifting focus to Regulation of Cryptocurrency

U.S. Congress shifting focus to Regulation of Cryptocurrency

By ttadeleye | All Things Blockchain | 28 Apr 2020


In the wake of a global pandemic causing the world's economy to grind to a halt, millions of individuals find themselves without jobs. Government officials have their hands full trying to stop the bleeding, but with limited options the U.S. and other nations have, they are struggling to find solutions. Quantitative easing has been consistent since mid-march to help support families in this dire time, but this solution will soon spell trouble for the dollar and other major currencies around the world. Desperate times call for desperate measures, and the U.S. government is now starting to turn to crypto and blockchain as a potential solution. 

 

Crypto enthusiasts and those deeply immersed in blockchain have been waiting desperately for rules and regulation to govern the space. For global adoption to occur, regulation is the next logical step. Without this, the majority of people new to crypto and blockchain will be hesitant to get involved with the new tech. U.S congress has now introduced 32 bills around cryptocurrencies and blockchain. These 32 bills cover the following areas

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1. Use of Cryptocurrency in Potential Terrorism, Money Laundering, and Human Sex Trafficking

12 of the 32 newly introduced bill are regarding the use of crypto in illegal activities. This is no surprise given the history of Bitcoin with silk road(https://www.investopedia.com/terms/s/silk-road.asp). The illegal activity that occurred on silk road led many to believe crypto was only used to hide illegal activity. To get past the stigma, it is important that rules are set in place to slow down the illegal activity through crypto. Key word: "slow down". It will not be possible to eliminate illegal activity through crypto just as it is not possible to eliminate illegal activity through fiat currency. One of the 12 bills called the "Defending American Security" looks to protect financial institutions and cryptocurrency exchanges from cyber theft.’ This is a step forward for cryptocurrency exchanges as it puts them on the same level of importance as financial institutions on the geopolitical stage. 

 

2. Regulatory Framework and Treatment of Cryptocurrency and Blockchain

The highest number of bills in any category covers the regulatory treatment of blockchain and cryptocurrency as well as the tax treatment of crypto. Facebook faced heavy scrutiny when they proposed the Libra project, which aimed to be a digital currency. Government officials are heavily against large social media companies controlling a global currency. Only 5 companies: Microsoft, Apple, Amazon, Alphabet, and Facebook take up roughly half the market share of the all the companies in the S&P 500. Allowing too much leniency with big tech companies' involvement with crypto could potentially pose as a threat to the government.

 

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one of the bills underway is titled ‘Keeping Big Tech Out Of Finance’ with an aim to not allow a large social media platform to engage in financial activities in the crypto space.

 

3. Promoting the Use of Blockchain Technology by the U.S. Government

Taking up 16% of the 32 bills, congress has set aside this portion to address Blockchain application outside of currency. This is exciting as those who have been researching other use cases can take solace in the fact that adoption will grow quicker with government backed research. One bill in this category is around how blockchain technology can be utilized for better hospital data security.

 

4. U.S. Central Bank Digital Currency

6% of the bills are around a central bank digital currency. Compared to other nations, the U.S. is behind in their consideration of this. To date, countries that have issued their own cryptocurrencies include Ecuador, China, Senegal, Singapore, and Tunisia. Developing a central bank digital currency will enable faster and more efficient transactions, and will provide nations with an alternative during this time when fiat currency continues to decline.

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