Senator Lummis from Wyoming plans to introduce legislation in early 2022 to attempt to rein in some of the wild west of the cryptocurrency world. Stay tuned.
Rumor is that it will add investor protections, rein in stablecoins and create a self-regulatory body under the SEC and the CFTC. That might be a tall order since a lot of crypto is peer to peer. Still, if we at least have some clarity over who gets to be the regulator, that would be good.
An aide to the Senator said that the proposal would fully integrate digital assets into the US financial system. If Congress can actually pull that off, then cryptocurrency could operate under similar rules to banks.
Still, what is different here is that cryptocurrency can be fully decentralized with no middleman to regulate. Do they plan to regulate software somehow? Software that, potentially, is not even made in the US? That sounds like a tall order.
What they might have is, rather than as the senator is calling it, comprehensive, a start to working on the problem.
Most consumers do go through crypto exchanges and at least those in the US would be relatively simple to regulate.
It also, could, possibly, cut down on crypto scam. It is possible.
As a example of how hard this is, many are suggesting that just the tax reporting requirements that are already in the just passed Infrastructure Investment and Jobs Act cannot be met. Imagine what happens if you want to take an entire industry that has never been regulated and try to regulate it. What could go wrong?
A group of Senators already wrote a letter to Secretary Yellen says that the current (new) law already tries to classify software developers as brokers, which it seems to me, they are not. You want software developers to send 1099s to people who download their software? Really?
Other members of the current administration are concerned as well and the Senate held hearings earlier this month on stablecoins. Senator Warren said that (in her view), the peer to peer nature of DeFi – decentralized finance – is the most dangerous part of the crypto world.
Visa just announced that it will partner with 60 cryptocurrency exchanges to allow consumers to make purchases with digital currency at more than 80 million global merchant locations. I want to see how that works out.
You might remember that cryptocurrency started out as a way to get around the banking system.
Now, like with Star Trek’s Borg, crypto looks like it could be assimilated into the banking system, basically eliminating any possible benefit that the people who originally championed it might be interested in.
It sounds like the crypto players may have gotten outplayed.
Credit: Data Breach Today