Congress and Crypto: Part 3

Congress and Crypto: Part 3

By Cje95 | Texas Boy in a DC World | 20 Sep 2021


Now that Congress is about to be back in session I thought it would be a good time to really sum up what has been going on the last month or so. Some of what I will be writing about I have mentioned in previous articles and some will be brand new! This will allow everyone to really know what to watch for and what could occur pretty soon vs what is in the pipeline for future regulations or studies (commissions is what they often call them). 

 

This summer due to the huge DeFi explosion and stablecoins becoming a bigger and bigger part of the crypto world Congress and other regulators in the Federal Government took note (the SEC, the Fed, some task forces, etc.). A lot was said by people on both sides and you did have some people in Congress call for all out crypto bans which tended to really backfire on them as it showed how they did not understand the technology at play. Luckily though as things sit right now there is absolutely no ban on crypto in the pipeline and really the people who came out and stated it have pretty much backtracked on the idea. 

 

There are a few main themes though and I will hit on all of these. The themes are regulation, blockchain adaptation within the government, Central Bank Digital Currencies (CBDC), and consumer safety (prevention of rug pulls). All of these are very important things to pay attention to in the space and all could lead to very different reactions by the market and even in some cases negative fallout. An important thing to note as well is that now you have very valuable companies that are invested in crypto like Bitcoin and so the government is going to be very careful not to overdo it and cause these businesses to fail. Both sides of the aisle for instance love Tesla for different reasons. The left is due to clean energy products being created for the masses while the right loves them for manufacturing within the United States! This means that no matter what the government is not going to kill Bitcoin as it could cause Tesla to lose BILLIONS of dollars instantly. 

 

Regulation

An issue that the government has really been kicking down the road for sometime now is facing an increase in the likelihood it is address. Honestly, to me this seems like something that has been discussed since 2017 and so far has not resulted in anything. Congress though will finally be addressing this this week though. As the House Majority Leader Steny Hoyer has said the House will vote on the bipartisan infrastructure bill September 27th of this upcoming Friday. 

 

The infrastructure bill will touch on large transactions in crypto currency and require these transactions to be reported. This is part of the broker definition issue that has been hotly debated. While most people will not be affected by this required reporting miners have been worried about this very thing. From what I have come to understand they have been given a way out with an amendment that was added to the Senate bill. Also addressed from what I have come to understand is large holders of different PoS cryptos allowing those who have slowly accumulated a compounding coin are not faced with reporting issues as well. Again none of this is finalized yet as the bill will be debated and voted on this upcoming week!

 

Government us of Blockchain Technology

In this years National Defense Authorization Act also known as the NDAA and amendment was added to further study the implementation of blockchain technology into the Department of Defense and other military based uses. This amendment passed the committee and now along with the Act is set to face discussion and debate on the House floor this week. Unless something radical happens it should end up passing and so the government will study military applications on blockchain. 

 

There are also several different bills that look to see how blockchain technology can be utilized by the government. More importantly it seems the House of Representatives wants to continue to learn more and has authorized studies to investigate blockchain as it is currently being used and how it is being used to give the government an idea of what the technology is doing. 

 

Central Bank Digital Currencies 

Different bills have been submitted to deal with this and honestly cover a huge and vast variety of topics. Some of the interesting ones include how the Federal Reserve could use blockchain to disperse future stimulus payment instantaneously like what we have heard about going on in China. Other want studies to look into minorities being given assess to a bank like system for receiving and paying bills to give these groups better access to financial tools. All of these bill though at best have been referred to committee and from what I have found are really stuck there. Unless these bill are attached to other larger ones it would be hard to see them pass through committee on their own and if they do I doubt they would make it off the House floor and onto the Senate. 

 

This though is an area where if the US economic struggles continue a bill could be crafted to really launch the research and pilot programs to test out a CBDC dollar. It has been stated that the US lacks behind almost all other developed countries in this field. However unlike most countries the US does not have a true Central Bank rather they use the Federal Reserve that is rather independent of the government. This is one reason you could argue that the US has been so slow and behind in the investigation and roll out of studies and investigations into it. 

 

Consumer Safety 

Due to rug pulls and shady ICO's the government has taken the approach of protecting individuals from these bad actors. Whether you believe the government should or not it is something that can be understood that they would want to protect their citizens from harm. In banks for instance we see the government protecting bank accounts up to $250,000 with crypto though that does not exist. The SEC has sued many failed or questionable ICO's to retrieve investor funds and return them to those investors who lost money. 

 

This is what I would anticipate future legislation to address. Federal agencies like the SEC and Federal Reserve have said that they do not have much power over the crypto realm here and has asked government to grant them powers to help people and to set up programs and policy to do so. Currently nothing has been introduced to do this so only time will tell if this does happen this year. It seems that for the next few months a lot of time will be spent battling over the infrastructure, spending, and debt ceiling cap rather than other legislation that could address this section of government regulations. 

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Cje95
Cje95

Graduated from Texas A&M in May of 2020 had dabbled in crypto since 2017 but dove in at the end of 2019. December of 2020 packed up and moved to D.C. and shares my growing pains with y’all here! Huge sports fan, space nerd, and international news reader!


Texas Boy in a DC World
Texas Boy in a DC World

The adventure of moving from Houston, Texas to Washington, DC, and all the shenanigans that take place!

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