Last week was.... eventful to say the least. Working in a leadership office leads to people across the United States calling our office and even some people calling internationally. Trying to keep track of all of the rumors and gossip was a mind boggling situation however it appeared early that one thing was for certain. The Build Back Better plan was not going to pass leaving the only bill that could possibly be voted on being the Senate Bipartisan Infrastructure Bill.
This bipartisan bill was the first of what will probably be many that issue guidance/regulation to crypto. Luckily for the crypto community as a whole the guidance was not extensive. Actually that is part of the issue with it.... its way to broad. In the bill there was language that stated that cryptocurrency brokers were going to be required to report transaction of more than $10,000 in value. What this does is apply the same type of regulation that is currently on banking to the crypto realm.
The issue with this language though was that a "broker" was not really defined. When the Senate attempted to fix this the effort failed and so they lobbied the House to fix it. Due to the issue of just getting it put up for a vote though this did not happen and so the poor broad language was left in place. This language is problematic because it could be used to target miners or exchanges when the real target of this regulation was supposed to be the institutions that deal in crypto and are known as brokers like Fidelity.
The far bigger news that might be addressed in the Build Back Better bill is stablecoin regulation. Stablecoin regulation was a topic covered by the Presidents Working Group on Financial Markets and while they found some positive things like how stablecoins could be used as a much quicker payment method they also stated that they should be regulated. Its not the idea of regulation though that is an issue the issue lies at how they recommended that stablecoins could only be issued by insured banks.
This would mean Tether and USDC would no longer be able to be issued. I have no idea what type of effect that could have on the market but honestly it cannot be gone. While it makes sense that the US would want cryptos pegged to their currency to have some sort of regulation and backing to keep their price up going about it this way is extremely counterintuitive.
This week the House is out of session and it is a committee work week so I would not expect much action on this front. Next week though the Democrats want to push through the Build Back Better plan and so something addressing this could be thrown in as some way to help "pay" for the plan. I will be monitoring this as the report does state that Congress was the one that needed to pass the regulation and that existing regulator bodies did not have the ability to enforce these regulations.
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