If you ask the professionals of financial supervision, the case is clear: “95 percent of cryptocurrencies are fraud, hype, noise and confusion,” said Neel Kashkari (48), Minneapolis Federal Reserve Governor, at a conference Tuesday. Fed chief Jerome Powell (68) exults at the central bank’s plans for a digital dollar: “Then you no longer need cryptocurrencies”. Gary Gensler (63), the new head of the SEC, calls the crypto market the “wild west”. And the Treasury of Janet Yellen (75) has published a report, according to which Bitcoin and Co. pose a “significant problem of education” and “facilitate illegal activity including tax evasion”.
All signs point to state control. Civilization comes to fence in the wild west.
One of the first concrete steps to end the irregularity is a reporting requirement for larger crypto trades. In the future, orders with a value of more than $ 10,000 must be reported directly to the IRS. This rule found its way into the major infrastructure package approved by the US Senate last week following the warning from Yellen’s Ministry.
It was a defeat for the crypto scene. And yet it celebrates like a victory that it is now even perceived as a serious political force in Washington. The Wall Street Journal writes of a “moment of growing up”. For the first time, the already vocal fan base in social networks, their prominent and super-rich spokesmen, professional lobbyists and allied MPs worked together effectively to influence the legislation in their favor.
“The crypto community has come out as a powerful interest group,” says happily Brian Armstrong (38), head of the Coinbase crypto exchange. And the opponents also show their respect: “Crypto now has a voice in Washington,” says political analyst Andrew Park from the Americans for Financial Reform group, which campaigns for strict regulation.
Lobby veteran hired by Goldman Sachs
The hashtag #DontKillCrypto, spread by crypto multipliers such as Elon Musk, Twitter boss Jack Dorsey or the actor Ashton Kutcher, led to more than 40,000 calls to parliamentary offices. There they found receptive interlocutors: above all the Republican Senators Pat Toomey and Cynthia Lummis, who privately invested in Bitcoin on a large scale and organized parliamentary resistance, but also more progressive representatives of the ruling Democrats such as Ron Wyden.
The operation was accompanied by prominent figures with government and lobbying experience who were hired by crypto companies this year. Faryar Shirzad, previously a puller for Goldman Sachs, now heads Coinbase’s policy department. Julie Stitzel came from the US Chamber of Commerce to Dorsey’s payment company Square, which relies on Bitcoin. And the previously divided industry associations such as the Chamber of Digital Commerce or the Blockchain Association came together on the matter. In the first half of the year, the crypto lobby doubled its spending in Washington, according to the Wall Street Journal.
The activists were smart enough not to view the dispute as a fundamental issue of a struggle against the established monetary system. Bitcoin maximalists who spread the self-assurance under the slogan “HODL” that sooner or later the dollar will overtake the dollar do not need a vote in Washington and neither do they get one.
Instead, the newly formed lobby focused on a harmless, detailed question: to whom the new reporting obligation should apply. The fact that the law generally speaks of brokers of digital assets could affect any service provider and would be impractical. After all, not every company that offers crypto services has insight into the trading orders. In the end, this argument also convinced Senator Rob Portman (65), the author of the regulation, to propose a narrower definition as a compromise so that only crypto exchanges are covered.
The original version was then decided in the Senate. But the crypto lobby is now on the upswing. First of all, the infrastructure package has to go through the House of Representatives, where a non-partisan “blockchain faction” has been organized for a long time. Then there would be another lever if the tax authority IRS formulates the regulations for the implementation of the law. And if necessary, you can also introduce your own bills to clarify the question. In this regard, the wild west is apparently history: no crypto cowboys shooting around uncontrollably.