Biden Administration Continues Confused Crypto Message With Broader Oversight Now Expected

Cryptocurrencies are still in their infancy. Blockchain technology still has a lot of room to improve, so regulatory policies imposed on the ecosystem can make a big impact on investors’ portfolios.

Bipartisan Bill Waiting for Biden’s Signature

On Nov. 5, the US House of Representatives passed a $1.2 trillion bipartisan infrastructure bill that embeds a series of crypto-tax provisions. This means that all US citizens dealing with cryptocurrencies will have to comply with new enforced crypto tax laws.

The bipartisan bill is a series of amendments written in an unclear language. It seems that the politicians who drafted had little concern or knowledge of the encompassing elements and terms of the cryptocurrency ecosystem. One of the things that outraged the crypto community is that the bill intends to treat software developers, node operators, and transaction validators as if they were the same entity as traditional brokers.

The Crypto Amendment

This was heavily criticised by the crypto community in the US, with leaders like Coinbase CEO Brian Armstrong calling for the revision of the amendments and supporting crypto-friendly politicians like the Senators Cynthia Lummis, Pat Toomey, and Ron Wyden. Together, they drafted an amendment proposal to clarify the verbatim of the bipartisan bill and some of its inconsistencies, clarifying the definition of brokers regarding reporting requirements for entities dealing with crypto assets.

However, the amendment fell one vote short of passing thanks to republican Senator Richard Shelby, who opposed negotiating the proposal between the republicans and the democrats. The reason was he tried to include his own amendment to the bill —heavily unrelated, as instead of modifying and clarifying certain terms, it rather sought to increase military spending by injecting at least 50 billion in defense funding.

Now the bill has been passed to President Biden after a long debate that culminated in a 228-206 win.

The problem with the bipartisan bill is that certain reporting requirements are quite unrealistic and puts a lot of pressure on the DeFi community. The requirements make it impossible for DeFi users, whether node operators or software developers, to comply with such rules. This is not only bad for decentralised finance —it’s bad for the entire crypto community and could stifle innovation in the US. Some politicians have called the bipartisan bill a “part of a socialist agenda.” Like Rep. Paul Gosar said, “I voted against this so-called “infrastructure” bill. This bill only serves to advance the America Last’s socialist agenda, while completely lacking fiscal responsibility. Less than 9% of the $1.2 trillion price tag goes toward hard infrastructure.”

Crypto Regulation for Stablecoin

We can expect a greater oversight for the crypto space in the US anytime soon, with the Biden administration planning to regulate stablecoins. As per a report, Janet Yellen, Treasury Secretary, said that stablecoins should be regulated in order to protect users and the crypto space.

Stablecoins are a form of digital asset designed to provide stability and avoid the inherent volatility of traditional cryptocurrencies like bitcoin. They do this by tying their value 1:1 with a fiat currency, such as the US dollar. One of the largest stablecoin issuers is Tether (USDT), a stablecoin issued by Tether Limited, which holds its price at $1.00 and keeps $1.00 in reserves for every USDT issued.

“Stablecoins that are well-designed and subject to appropriate oversight have the potential to support beneficial payments options. But the absence of appropriate oversight presents risks to users and the broader system” —Said Yellen

There are other stablecoins like DAI Stablecoin, USDC (USD Coin), Binance USD (BUSD), and more. These coins are often used to pair different cryptocurrencies in trading, like BTC/USDT, ETH/USDT, SOL/USDT, etc. While their use has been limited to trade cryptocurrencies on retail exchanges, some politicians and regulatory bodies in the US believe stablecoins can benefit vastly the payment system, yet they want to impose the regulatory hand in order to ensure investors’ protection.

The crypto community could expect greater regulatory laws for digital assets. While some countries like the US are imposing unrealistic reporting requirements and other regulatory laws, some countries like El Salvador have decided to take a different approach and seize the benefits of blockchain technology and cryptocurrencies. One of them is allowing its unbanked citizens to have financial freedom with a digital wallet and allowing P2P transfers without relying on third parties.

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