The democratic party is constantly worrying about the future of crypto and its impact.
As 2022 begins, America is approaching the first anniversary of Joe Biden's presidency. After the start of an ambitious mandate in recent months, we have seen a severe shock to the general health of the US economy, the government's response to the COVID-19 pandemic, and heated debate over Opus Magnum Biden.
But while the ability of Democrats to maintain undivided power after the 2022 by-election may be called into question, the party's view on cryptocurrencies has become stronger than ever. The incumbent party will set the tone for the regulatory debate for at least the next three years, so it's worth taking a closer look at the key terms and possible directions for the nascent crypto position.
The path that the great crypto-centric Democrat has taken over the past three years is perfectly captured by an anecdote of two public statements by Clinton about crypto. One of them came from the 42nd President of the United States, Bill Clinton, then 72 years old, who said at the Ripple Swell Conference in October 2018 that the “permutations and possibilities” of blockchain were “very big”.
Three years later, at the Bloomberg New Economic Forum in Singapore, calling cryptocurrencies an "interesting technology", Bill's wife and former presidential candidate Hillary Clinton warned of their power to weaken the US dollar and destabilize small but developing countries. This glaring disagreement between the ruling pair reflects the recent evolution of the Democratic Party itself - from the "third street", business, technology, and financial-friendly centrism of their generation from the 1990s to newfound statism with a strong emphasis. on redistributive justice and major government projects. By today's standards, the former first lady sounds fairly balanced compared to her fellow party member Senator Elizabeth Warren, who stormed the crypto market after volatility erupted in early September:
Proponents say that the crypto market is tied to financial inclusion, but the people who are most economically vulnerable are the ones who tend to have to withdraw their money once the market crashes. High and unpredictable fees can make cryptocurrencies very dangerous for people who are not rich. Warren has repeatedly criticized crypto, calling it a “fourth tier alternative to real currencies” that is “unsuitable as a medium of exchange”; A "bad investment" that "has no consumer protection" and an instrument that facilitates many illegal activities.
The negative sentiment was mostly shared by Senator Sherod Brown, which is perhaps even more worrying given his status as chair of the Senate Banking, Housing and Urban Development Committee. Brown's opening remarks at Congressional hearings have never been crypto-friendly. Their overall enthusiasm can be summed up in the introduction that opened the July trial, entitled "Cryptocurrencies: What Are They Good For?"
All these currencies have one thing in common - they are not real dollars; they are not backed by full trust and credit from the United States....And that means that they're all betting America's hard-earned money. Brown accused the "home industry of decentralized financial systems" of trying to create a "parallel financial system with no rules, no oversight, and no restrictions," calling it a "fun and shadowy online money network," without anything democratic. or transparent it. Legislators have repeatedly rejected the idea that cryptocurrencies could be an alternative to legacy money – most recently in December in Congress: A stable coin and crypto market is not really an alternative to our banking system...you are a mirror of the same broken system - with less responsibility and no rules whatsoever.
However, not everything is dark. A figure who takes a more moderate, if not pragmatic, approach to cryptocurrencies – Congressman Maxim Waters – will also play an important role in the future performance of the industry. As Chair of the House Financial Services Committee, he initiated the Working Group on Digital Assets by Democrats with the aim of ensuring responsible innovation in cryptocurrencies and digital assets and “meeting with regulators, advocates, and other leading experts. how these new products and services are reshaping our financial system."
Senator Waters publicly acknowledged that "more Americans are making financial decisions using digital assets every day," and confirmed that their committee would review "the promise of digital assets, faster payments, instant billing, and lower transaction fees."
What is this all about?
The good news is that there is a buzzword behind that ugly oratorio: regulation. At this point, it is clear that China's all-out war on cryptocurrencies is not an option in the United States. So, what has fueled the hot work of congressional committees and federal agencies in recent months is the clear intention of the democratic establishment to improve the rules of the game before the next presidential election.
Part of the Biden administration's effort was to create the President's Working Group on Financial Markets, a superhero team made up of leaders from the SEC, CFTC, OCC, FDIC, and Federal Reserve, with the Secretary of Finance as Group Director. So far, the main product of the working group is a 26-page report on stablecoins that advises Congress to identify some stablecoin activities – such as payments, clearing, and settlements – as “systemically important” (which will inevitably lead to closer scrutiny) and restrictions Issuing stablecoins to insured custodians, namely banks.
As in the pre-Biden era, the main problem lies in the basic classification of digital assets. The PWG report does not propose a new interpretation or endorse a single regulator, thus maintaining a situation where different regulators oversee different types of cryptocurrency-related activity. In October, Rostin Benam, chairman of the Commodity Futures Trading Commission and member of the Democratic Party, said up to 60 percent of digital assets could be classified as commodities, a proposal to make the agency the world's leading digital currency regulator. He also said his agency, as well as the Securities and Exchange Commission, would likely need "a regulatory structure for stocks and commodities." How exactly this will help the ongoing patchwork approach to regulation remains a mystery.
There are several reasons to believe that the proclamation of 2021 will largely be followed by concrete action next year. The first is the general idealistic mindset of the American Democrats. For example, the pursuit of aggressive regulation by big technology is an integral part of this thinking.
As President Barack Obama and several regulators partnered with Google and Twitter to drive the growth of internet businesses, the Joe Biden administration came to power amid a wave of public concern over international cyberattacks, private data leaks, and poor meta-governance in power, hugely impacting the entire political process. which has been accumulated through Goliath technology. With Meta and Google battling state and state regulators in court on anti-competitive allegations for some time, the Biden team has also pledged to hold tech companies accountable for toxic speeches they hosted and to strengthen anti-competitive police practices.
However, in 2021, we will not see a significant political move in this direction. Neither of the two main laws is the Amy Klobuchar bill, which would prohibit major technology platforms from giving preference to their own products and services, and the House bill, which aims to lift some of the protections afforded to tech companies by Section 230 decency in communication law - becomes law. The second reason Democrats are rushing to put crypto within regulatory limits is pragmatic: The Biden government and its allies on Capitol Hill need the money. Biden's first term hinged heavily on Roosevelt's ambitious infrastructure project. While the $1.2 trillion Infrastructure Investment and Jobs Act was backed by both parties and signed on November 5, the Better Recovery Act, now hangs by a thread after Democratic Senator Joe Manchin announced Rejecting the current project costing nearly $2 trillion.
By some estimates, when the spending program hits the president's office, it will add $360 billion over 10 years to the deficit, making it all the more urgent to collect more tax revenue. This makes the burgeoning crypto industry a key battleground for Democrats, who see the opportunity to raise money with it and the urgency to prevent tax evasion through digital tools.
There's no doubt that the Biden administration will continue to have a tight regulatory agenda in 2022. We'll see more hearings in Congress next year, but tighter negotiations will take place behind closed doors, with Democrats having to make the final say on whether the SEC, CFTC, or any other body should dominate the cryptocurrency. Despite Sherrod Brown's recent statements "with or without Congress," it's also hard to believe that Republicans will let their opponents decide the fate of the industry for themselves.