Are Major Changes Coming For Cryptocurrency?
Well, it’s mid-June and I finally have put all the tax preparation, and tax planning behind me. That’s allowed me to catch up on my normal daily routine along with peppering my weekends with tennis, cycling, and a friend’s fun wedding.
I’m about to outline a few legislative pieces that were quietly released in March. As you may recall, March was filled with debating Will Smith’s backhand that went around the world, the Ukrainian War, and how to handle the no longer “transitory” inflation. Since then I have spent my spare time diligently reading major legislation centered on America’s currency, banking, and tax system.
Yes, this is the type of stuff I read for fun.
These legislative actions will have an IMMENSE impact on every citizen since our currency and tax systems impact our ability to survive. I will be releasing my analysis of each separately since they cover broad topics. Here are the legislative pieces by name:
- Executive Order on Ensuring Responsible Development of Digital Assets,
- ECASH Act
- 2023 Budget
My first analysis is centered on #1, or what I’ll refer to as the “Crypto Executive Order.” By the first sentence I knew we were in trouble.
Team Biden somehow managed to associate a topic regarding financial stability and money laundering with:
Human Rights
Social Justice
Climate Change
Here is the first section.
“Section 1. Policy. Advances in digital and distributed ledger technology for financial services have led to dramatic growth in markets for digital assets, with profound implications for the protection of consumers, investors, and businesses, including data privacy and security; financial stability and systemic risk; crime; national security; the ability to exercise human rights; financial inclusion and equity; and energy demand and climate change.”(emphasis added)
Hmm…
We all want our civil rights protected so no immediate red flags. But climate change and crypto money??? That’s a bit of a stretch.
In Section 4 we are provided one answer to where this is heading.
“Sec. 4. Policy and Actions Related to United States Central Bank Digital Currencies…” (CBDC)
“…My Administration places the highest urgency on research and development efforts into the potential design and deployment options of a United States CBDC.”
Clearly a “Crypto Dollar” is on the drawing board. This doesn’t make sense to me since money is 99% digital already in today’s world, but whatever floats the White House’s boat.
Another part of me wonders if this is related to the Federal Reserve’s program called FedNow which was launched a couple years ago. This system is designed to create an instant Federal payment system. Time will tell if this will be connected.
Finally, in Section 7 we get to what I always believed was the main issue with crypto – Money Laundering.
“The growing use of digital assets in financial activity heightens risks of crimes such as money laundering, terrorist and proliferation financing, fraud and theft schemes, and corruption. These illicit activities highlight the need for ongoing scrutiny of the use of digital assets…
….and exploration of opportunities to mitigate these risks through regulation, supervision, public‑private engagement, oversight, and law enforcement.”
Clearly more regulation is coming, but what does that look like? Will the new slogan become “Crypto Is For Criminals” to justify change? For the record, money laundering is reported to be a very small percentage of all crypto transactions.
Overall, it’s not passing the initial sniff test. To me, stating you are trying to solve unrelated social problems with the monetary system is a strategy to distract everyone. Plus, the Executive Order never fully detailed how this is related to climate change.
First, let’s not start jumping to low probability conclusions. Surely don’t start bashing the Fed which unfairly gets blamed for everything that goes wrong in our economy when most of the blame lies in Congress.
Secondly, it’s nearly impossible to leverage the financial system at the governmental level in ways that will solve these problems. In fact, the government will probably make social matters worse based on its track record.
Lastly, the Executive Order gave multiple agencies anywhere from 90-210 days to issue reports on the “implications, development, and adoption of digital assets.”
That means we will start seeing the initial reports very soon. These reports will provide greater clarity to the overall game plan.
Meanwhile, the crypto market clock is ticking.
https://www.whitehouse.gov/wp-content/uploads/2022/03/budget_fy2023.pdf
https://frbservices.org/financial-services/fednow/
https://www.armstrongeconomics.com/world-news/taxes/ecash-bidens-attack-on-the-financial-markets/
I’ll detail how this is related to the ECash Act and 2023 Budget in future writings.
