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We should probably expect further Crypto regulation from a confused congress
Announced just a week ago, Facebook’s Libra token has already drawn scrutiny in Washington from regulators who probably don’t understand any of what is going on with crypto, or digital currency in general. Maxine Waters, the chairwoman of the House Financial Services Committee, has scheduled hearings to examine Libra and told Facebook to stop development of the project.
Listening to CNBC today in the car, I heard one host ask why Libra is being questioned, and why congress did not hold hearings on other Crypto. That is a good question. The answer is likely because they do not really understand Crypto, but they already have Facebook under scrutiny, so they can use this as a gateway into the Crypto conversation. Once lawmakers head down this path I assume Bitcoin, Ethereum, and other projects will be brought into the overall conversation. We know that the government has been pondering Crypto and what to do about it at various levels, but this Libra investigation could tip things in a new direction.
Some have always called for increased regulation of Cryptocurrency, arguing that it will help legitimize it. Others, like early adopter libertarian types, have made the case that any government oversight will ruin Crypto.
I personally think the government will eventually try to act on Bitcoin and other Cryptocurrency because it does pose risk to the establishment. However, they don’t yet know what to do, or how to do it. Once they figure out a plan, they will probably try to exert some sort of control over the whole space, especially privacy tokens and projects.
It is possible that Facebook getting into Crypto is going to open a can of worms. Libra will lead certain people in power to question a whole slew of projects that have been off the radar of Congress. They will most likely use this to demonize crypto even more than they already have.
Just read this statement from the House Committee on Financial Services:
“With the announcement that it plans to create a cryptocurrency, Facebook is continuing its unchecked expansion and extending its reach into the lives of its users. The cryptocurrency market currently lacks a clear regulatory framework to provide strong protections for investors, consumers, and the economy. Regulators should see this as a wake-up call to get serious about the privacy and national security concerns, cybersecurity risks, and trading risks that are posed by cryptocurrencies.”
That statement pretty much says it all. It includes all the buzzwords about consumer security, the economy, and national security. Some will say Bitcoin can’t be regulated or controlled, but we have already seen tools built to track transactions, and some exchanges shutting down or moving offshore. Let’s face it, we still don’t even know who created Bitcoin or what the future holds for it.
A potential positive side to this might be regulations that will clear up confusion for exchanges and projects that have been operating in a grey area. Again, that depends on what side of this you are on and how you view things. Do you want a regulated system because it allows you to legally trade and make money, similar to traditional markets? Or, do you believe that Crypto is the future of money and wealth storage, and think the government will ruin it?
There are all sorts of questions around Libra; What category is it? Can it be taxed? Could you trade it for another token? What about KYC and AML laws? Is this good or bad?
Libra may not even qualify as a Cryptocurrency, but it is being put in the same category as Bitcoin by the media and government. Time will tell but I think this is the start of a new era for Crypto here in the United States.