New Crypto Legislation Doesn't Look Good
Despite a marathon effort to amend the crypto language in the new infrastructure bill, opposing forces make the chances of success difficult
The US Senate vs Crypto (again)
If there is one thing you do today, call your Senator and tell them to:
- Vote YES on the Wyden-Lummis-Toomey amendment of the Infrastructure bill
- Vote NO on the Portman-Warner amendment of the Infrastructure bill.
If you're willing and able, please use the number and script here to call today, the bill is being voted on tomorrow!
In their latest attempt to regulate Cryptocurrency, the US Senate introduced a last-minute provision to the massive $550 billion infrastructure bill, which passed and advanced into legislation earlier this week. The infrastructure bill, which details a country-wide spending plan on everything from roadwork, to environmental “clean energy” initiatives to improving broadband internet, now includes a provision that crypto miners and those holding crypto wallets would now be subject to reporting their transactions and be subject to paying taxes on their holdings. The government estimates this will raise upwards of $28 billion dollars in taxable revenue.
Experts believe, though, that this would be impossible to enforce as the new rule defines anyone who participates in a crypto transfer as a “broker” and would therefore have to report their activities. Even software developers would be subject to scrutiny under the new rules. It treats everyone in crypto like a traditional financial institution, forcing them to report data that they have no way of getting.
In a marathon effort to get better language into the bill, Senator Wyden, Senator Lummis, and Senator Toomey, put together an amendment that clarifies that non-custodial participants like miners and developers aren't considered “brokers” under this new rule.
However, entrenched interests pushed back, and a competing amendment was put forth that is even worse than the original language.
“In a DC flip-flop so fast it'll make your head spin, Senator Portman proposed his own competing amendment, co-sponsored by Senator Warner, a Democrat.
The Portman-Warner amendment is worse than useless. Portman-Warner protects PoW miners & some (but not all) wallet projects. That's it. Not software developers, or Lightning node operators, or PoS validators, or DEX liquidity providers, or DeFi aggregators, or many other non-custodial actors who can't comply with the law. …
What really gets me is how Portman-Warner cuts out subsection (C) from Wyden-Lummis-Toomey, which simply protects developers who write code & don't sell anything. This is *basic* First Amendment freedom of speech. It's jaw-dropping for two sitting Senators not to get that.
Now we have two competing bills, one good & one terrible, both coming up for a vote tomorrow.”
If the Portman-Warner proposal passes, it will no doubt drive a huge amount of innovation offshore. We can stop that from happening by calling our representatives tonight, it only takes 2 minutes.
Riccardo Spagni (also known by the moniker “fluffypony”) who formerly served as privacy maintainer for the privacy coin, Monero, was arrested in Tennessee on July 20th for failure to appear in a courtroom hearing. He is scheduled to be extradited to Capetown, South Africa, where he holds residency. Spagni is accused of fraudulently generating false invoices and routing payments adding up to approximately $100,000 to his own personal accounts from his former employer, Cape Cookies, between 2009 and 2011. His defense team released a copy of his official statement via Twitter, citing that the only reason he was arrested was for failure to appear in court, and that only happened because he was already being represented by his legal team and was not told his presence was deemed mandatory.
Some see the arrest as an attack on crypto figureheads, but if that’s indeed what law enforcement are doing, they will quickly realize that coins like Monero don’t need figureheads in order to run, and will keep going no matter who they target.
Marathon Digital Holdings Doubles Down
Las Vegas-based Bitcoin mining company, Marathon Digital Holdings, has just bought 30,000 Antminer S19J Pro machines from Chinese-owned software company Bitmain for a whopping $121 million for use at Compute North’s data center in Texas. This very calculated purchase comes as no surprise, as many North American miners have taken advantage of the recent scale back of Chinese operations due to the recent crackdown order from Beijing. Marathon said in a statement that the miners would, “...produce approximately 13.3 EH/s, representing around 12% of the bitcoin network's total hash rate of 109 EH/s as of Aug. 1.” The shipment is scheduled to begin in the first half of 2022 and the company’s mining production is expected to rise to over 133,000 Bitcoin miners.
Oh, I wish I were an Oscar Mayer DogeCoin…
In perhaps one of the strangest but most amusing marketing stunts in recent times, Oscar Mayer auctioned off a single package of wieners, this week, that comes with a “cash value of 10,000 Dogecoins”. The auction which took place on eBay, was a runaway success and reached a bid of $3450 before being abruptly taken down. It is not yet known what the winning bid was, however this is only one instance of how viral marketing is becoming a key player for boosting the popularity of cryptocurrency. Dogecoin, originally created to be a playful jab at other popular cryptocurrencies, has seen a major boost in investor action thanks, in-part, to Elon Musk’s many tweets about loving the currency. It is currently unclear how the winning Dogecoin (worth about $2000 USD) will be transferred to the winning bidder.
Everything is a Security... Probably
Gary Gensler, chair of the SEC, was interviewed by Andrew Sorkin this week, and asked about the balance between innovation and regulation. Gensler said:
"I count myself as pro innovation....but we also need rules of the road... need trust in markets and trust in finance. This innovation, Satoshi Nakamoto's innovation, if it’s gonna meet its potential, it needs to come within public policy framework."
Many in the crypto space asked, “why?”
This interview comes after Gensler’s comments at the Aspen Institute earlier this week, which many found truly disheartening. The TL/DR:
Everything is a security
Even stablecoins are probably securities
Our jurisdiction knows no bounds
We need more staff (I don’t remember where I borrowed this TL/DR from, but will add when I’ve tracked it down!)
All tied in a neat little bow of “in the interests of national security”.
As Katherine Wu said, Gensler knows just enough about crypto to be dangerous.
Binance.US CEO Brian Brooks Resigns
Brooks announced in a tweet this afternoon:
“I have resigned as CEO of @BinanceUS. Despite differences over strategic direction, I wish my former colleagues much success. Exciting new things to come!”
Before leading the charge at Binance.US, Brooks was Acting Comptroller of the Currency at the OCC, which is the top regulator for national banks.
Binance Chairman of the Board CZ responded to CoinDesk:
“Brian’s work for Binance.US has been invaluable and we hope he will continue to be an integral part of the crypto industry’s growth, advocating for regulations that move our industry forward. We wish him the very best in his future endeavors.”
By Will Sandoval NBTV Associate Producer, and Naomi Brockwell
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