As discussions on how to regulate the cryptocurrency industry continue, the U.S. Infrastructure Act has stalled to a certain extent.
Written by Todd C. Frankel, Jeff Stein, Jacqueline Alemany and Hamza Shaba
Compilation: South Wind
The picture above shows attendees attending the “2021 Bitcoin Conference” in Miami in June this year, which attracted approximately 50,000 participants. With the advancement of the U.S. Infrastructure Act, U.S. legislators and regulators seek to control the cryptocurrency industry, and cryptocurrency companies are increasing their influence in Congress. (Photo: Joe Raedle/Getty I)
At 2:36 pm last Wednesday, a message was posted on Twitter: “Crypto Red Alert!”
This message came from a left-wing technology advocacy organization called “Fight for The Future”, urging people to call U.S. senators to oppose a new provision for cryptocurrency in the U.S. Federal Infrastructure Act. After that, the Senate office received a large number of calls. Those who opposed the rule included Jack Dorsey, the head of Twitter and Square, as well as senior bank supervisors during the Trump administration, and Brian Brooks, who later became an executive of Binance.US.
After years of debate on how to improve the U.S. infrastructure, as well as months of sensitive negotiations between the White House and legislators, the US$1 trillion in infrastructure proposal jointly proposed by the two parties in the U.S. Congress suddenly stalled, partly because of concerns. In what way will the government regulate the cryptocurrency industry, which is famous for crazy financial speculation, memes and ransomware attacks?
Last Saturday (August 7), the U.S. Senate took procedural steps to pass the infrastructure bill (it is expected that the bill will be passed in the next few days), but to what extent the government should regulate the cryptocurrency industry There are still differences on the issue .
Above: On August 7, the U.S. Senate voted to pass a $1 trillion infrastructure package. This is an important procedural step after months of negotiations. (Reuters)
Ohio Republican Senator Rob Portman and the Biden administration have agreed on a proposal that would give federal regulators the power to impose new tax reporting obligations on cryptocurrency brokers that enable traders to buy and sell cryptocurrencies . These cryptocurrency clauses emerged as U.S. lawmakers struggled to find ways to pay the tax bills that cryptocurrency traders should pay. Non-partisans estimate that these tax reforms will legitimize the cryptocurrency taxation work begun by the U.S. Internal Revenue Service (IRS), which will increase federal revenue by approximately $28 billion in the next 10 years.
But a coalition of liberals who worry about the government’s excessive intervention in the technology sector and conservatives who are skeptical of financial regulation strongly opposes the plan. They believe that this will damage innovation .
This disagreement led to a multi-day stalemate, which continued last Saturday, and negotiators had a heated debate on the details of which parts of the complex cryptocurrency industry will be subject to the new regulations.
Regardless of the ultimate fate of the bill, cryptocurrency regulation has become one of the biggest obstacles to the passage of the bill . This fact highlights the fact that the crypto industry has become a political force in Washington , which also indicates the surrounding (crypto) financial technology A series of battles that are about to take place. The technology has attracted billions of dollars of interest from financial participants on Wall Street, Silicon Valley, and around the world, although there are still very few people who understand the technology.
Mick Mulvaney, former chief of staff of former U.S. President Trump, said: “I think what you see is that the industry is maturing. You can see that people in the crypto field now understand how Washington can affect their world, and how Washington can affect their world. There is only a little understanding of technology.” Mick Mulvaney is one of several former officials who have been hired into the crypto industry in recent years.
“One of the challenges facing legislators is that they are still learning about the crypto industry,” said Mulvaney, who joined the advisory board of the blockchain trade organization Chamber of Digital Commerce in September.
As a medium of exchange, cryptocurrency allows people to transfer value to others without government supervision or financial institutions acting as intermediaries. In the past decade or so, cryptocurrency has grown from scratch and quickly developed into an industry with a total market value of US$1.7 trillion. The industry includes Bitcoin, Ethereum, XRP and many other currencies. All of these are digital currencies, and related transactions are recorded in a decentralized system.
Cryptocurrency was once only a hobby of a small number of cypherpunks, but now it is close to being accepted by the mainstream. Institutional investors are increasingly interested in cryptocurrencies, and possible misconduct in the industry is also attracting more legislators and financial regulators. Notice.
Encryption companies have also stepped up their lobbying efforts, attracting a group of former officials from both parties in the United States.
For example, former Senator Max Baucus of Montana became an advisor to cryptocurrency exchange Binance earlier this year; in May of this year, US Treasury Secretary Rosa Rios joined the board of blockchain startup Ripple during the Obama administration.
Today, U.S. cryptocurrency companies have nearly 60 registered lobbyists. According to the US Center for Responsive Politics, there was only one place five years ago. These companies will spend more than US$5 million on lobbying this year, double the total amount last year.
Casey Burgat, director of the legal affairs program at George Washington University, said: “They saw the bad omen and wanted to act before the regulations. I was just surprised that it took them so long to “lobby.”
But people have high doubts about this new currency. Cryptocurrency has faced criticism for its potential role in drug dealing, money laundering and cyber ransomware attacks. Some fanatical supporters of cryptocurrency said that this technology has the potential to bring about beneficial social changes and completely get rid of the shackles of central bank power. This technology has also raised concerns about energy consumption, because mining cryptocurrency requires a lot of energy and may exacerbate climate change.
Trying to formulate relevant regulations is extremely difficult, because cryptocurrency and its digital record system known as blockchain are notoriously complex topics. Some U.S. officials said that this leaves a lot of room for cryptocurrency enthusiasts to lobby members of Congress, who are unlikely to have a deep understanding of the crypto industry.
Last Saturday, the senators were seeking a compromise between two different approaches. One of the parties is favored by the crypto industry and is supported by Senator Patrick J. Toomey , Republican of Pennsylvania, Senator Ron Wyden , Democrat of Oregon, and Senator Cynthia M. Lummis , Republican of Wyoming, that the bill should specifically exempt cryptocurrency miners. To fulfill the new tax declaration obligations with software developers, they said that technically speaking, these obligations are impossible to achieve.
We know that cryptocurrency relies on “miners”, that is, individuals or companies that mint digital currencies such as Bitcoin through a complex calculation process. The Biden administration has always insisted that it has no intention of imposing tax declaration requirements on “miners,” but it is also worried that the broad exemption may create a loophole for the industry to evade taxation.
In order to find a compromise, Virginia Democrats Rob R. Warner and Mark R. Warner proposed to exempt only one type of cryptocurrency miners, but facing strong opposition from the industry, they agreed to expand the exemption range last Saturday. Including another important mining category. But as of last Saturday afternoon, these concessions seem unlikely to satisfy Wyden, Lummis and Toomey, who want a broader exemption.
The various political alliances that have emerged around this issue are not completely divided according to party affiliation. Republican Senator Toomey is an advocate of liberal economic policy, and he praised this innovative technology. As the top Republican of the Senate Banking Committee (Senate Banking Committee), he is one of the few members of Capitol Hill who supports encryption technology in recent months. He regards understanding and embracing blockchain technology as his own Mission, hired an encryption expert for his staff and became a popular figure in the industry.
As one of the hawks in the Senate who support privacy protection, Wyden has always been attracted by this issue. At the same time, Democratic Senator Lummis of Wyoming claimed to be the first Bitcoin holder elected to the Senate and claimed to represent a state that has become a center of cryptocurrency innovation.
Portman and Warner have been working closely with Treasury Department officials in drafting legislative texts to give more powers to regulators, and they also have close ties to Wall Street and the banking industry. Some people say that cryptocurrency has the potential to disrupt the banking system.
At the same time, liberal senators Elizabeth Warren (Democrat of Massachusetts) and Sherrod Brown (Democrat of Ohio) have put pressure on regulators to strengthen what they call unstable and risky to consumers. Regulation of the crypto market. They may eventually reach an agreement with conservative national security hawks who believe that cryptocurrencies provide more and more opportunities for terrorists, money launderers, and other criminals.
For many years, many people in the cryptocurrency space have wanted to avoid government regulation, but now they have changed their strategy. They believe that regulation is inevitable. In their view, it is best to strive to play a role in the formulation of new rules .
Casey Burgat of George Washington University said that for other industries (such as gambling or marijuana), this is a familiar understanding. These industries have tried to avoid the attention of the federal government, but all hope to operate nationwide. He mentioned the decision of former House Speaker John A. Boehner (Ohio Republican) to join the board of Acreage Holdings, a listed cannabis company in 2018.
Perianne Boring, Chairman of the Chamber of Digital Commerce, said: “We do need a legal framework to support this ecosystem. This does require engagement with regulators and policy makers.”
After this initial bipartisan infrastructure bill containing cryptocurrency provisions was announced, lobbying forces in the crypto industry moved quickly . The number of members of industry organizations block Chain Council (Blockchain Association) headquarters in Washington since 2018 has more than tripled, the association immediately began encryption IMF and other enterprises to cooperate with Coin Center and Digital Currency group and so on.
They coordinated lobbying activities through Google Meet video calls and encrypted messages on the Signal platform. They use Google Sheets to track the contact information of the Congressional Office.
Kristin Smith, executive director of the Blockchain Association, said: “This is a new level of coordination and efficiency that the cryptocurrency industry can achieve in Washington. For me, this week’s experience is completely different from any of our previous experiences. “
The cryptocurrency business is supported by Silicon Valley people, including venture capitalists Marc Andreessen and Ben Horowitz, and Dallas Mavericks boss Mark Cuban and other well-known investors.
Supporters of cryptocurrency believe that the hostility to the industry stems from the failure to see other aspects of cryptocurrency besides speculation and ignoring the business opportunities that blockchain technology can generate. Mark Cuban has invested in a large number of crypto-related companies, and he compares the potential of this emerging technology to the rise of the Internet.
“Closing this growth engine is equivalent to stopping e-commerce in 1995 because people were worried about credit card fraud, or because some people initially thought websites were complicated and didn’t know what they would become, so they regulated the creation of websites,” Cuban wrote in an email in response to the Washington Post.
The similarities between the current battles facing cryptocurrencies and how big technology companies have dealt with regulation are worth noting.
The crypto industry is also increasingly aware that this kind of influence game can bring its own benefits, especially in the face of increasing suspicion and censorship in Washington.
Even as the crypto industry is struggling to fight the infrastructure bill, a new potential battle has emerged.
Last Tuesday, the chairman of the US Securities and Exchange Commission (SEC) Gary Gensler stated in a speech at the Aspen Security Forum that he believes that most cryptocurrencies should be regulated as securities.
Gensler said: “I think that in the current crypto market, many of the tokens may be “unregistered securities”, and there is no necessary information disclosure or market supervision. This makes its price easily manipulated and puts investors at a disadvantage. “
A day later, Brian Quintenz of the US Commodity Futures Trading Commission (CFTC) argued that cryptocurrencies are actually commodities, not securities. Quintenz said on Twitter: “We all know that the SEC has no authority to manage pure commodities or their trading venues, whether they are wheat, gold, oil… or encrypted assets.”
This ongoing debate about what cryptocurrency really is shows the depth of the potential problems facing the industry.
“Any industry wants to participate in regulatory discussions,” said Reid Yager, the current director of public relations at Blockhaus, a blockchain marketing company. “But explaining all this to a 70-something legislator is a huge challenge in itself.”
Source link: www.washingtonpost.com
