Did you hear? Two Congressmen just proposed a law that would end taxation of cryptocurrency and exempt it from securities rules. As of this post, that law, H.R.2144, doesn’t even have a name yet. Breaking news!
What does this mean? Will the U.S. finally ditch its insane, nonsensical cryptocurrency regulations—regulations based on laws that are over 80 years old, laws that even its own regulators admit don’t really fit?
Maybe, if only they could figure out what “blockchain” means. And no, I’m not being funny.
Earlier this year, several members of the House and Senate introduced the landmark Blockchain Promotion Act of 2019 that would give the U.S. Department of Commerce one year to define “the distributed ledger technology commonly referred to as blockchain technology.”
Yes, that’s right—one group of Congresspeople just wrote a sweeping overhaul of decades-old legislation while another asked the government to take a year to figure out what the problem is.
Welcome to U.S. Congress!
Congress is old
Do you know the average age of a U.S. Congressperson?
Do you know the average age of a person who owns cryptocurrency?
No? Neither do I, but I assure you that person is much younger than 59. According to many different surveys across many countries, the vast majority of cryptocurrency owners are younger than 35.
Ok, Congress is old, crypto is young. So what?
You realize the U.S. cryptocurrency industry lives under old rules written by old people. New technology, old laws, and the people who are in a
Watching Congress write cryptocurrency laws is like watching your grandmother trying to use her iPad. You need to give her a lot of instruction, a lot of patience, and she still might not ever get it right.
To its credit, Congress is putting the horse in front of the cart for once. You can’t legislate something if you can’t define it. But if you’re expecting Congress to do anything substantial about the U.S.’s archaic, nonsensical cryptocurrency rules just because a few guys introduced a bill and a few websites wrote about it, you’re going to have to wait a while. Take it from a guy who spent the best part of his 20’s working in Congressional politics.
But Mark, the internet! They changed the laws for internet!
Yes, about 13 years after two guys in Chicago created the first online bulletin board, Congress passed the High Performance Computing Act of 1991 which pledged the U.S. government’s financial and regulatory support for developing the internet.
While Congress might do something like that for cryptocurrency, I wouldn’t hold my breath.
Politically, the internet was so different than cryptocurrency. First, it was a U.S. invention. Second, not only was it a U.S. invention, it was a U.S. government invention. Third, all the key players were U.S. companies. Fourth, it had a champion—Senator Al Gore—who was a well-liked, highly-accomplished, and effective legislator. Most importantly, big businesses saw a chance to make money with the internet. New markets, new products, new efficiencies, strong leadership.
Cryptocurrency is public, open-source, anti-government, global, leaderless, and has no champions in Congress. Unless you consider the Congressional Blockchain Caucus, which hasn’t updated its website since 2018.
Progress will happen slowly. Set your expectations accordingly.
Measure Progress in Inches
It’ll also be an uphill battle. Cryptocurrency still hasn’t shaken the stench of silk road and ICO scams. Let me give you a sample of the cryptocurrency bills that have passed at least one chamber of Congress, compared to those that haven’t even gotten a hearing.
Passed at least one chamber of Congress
- Homeland Security Assessment of Terrorists’ Use of Virtual Currencies Act—orders U.S. government to report the use of cryptocurrency by terrorists.
- FIND Trafficking Act—orders U.S. government to report the use of virtual cryptocurrencies in sex and drug trafficking.
Haven’t gotten a hearing
- Blockchain Regulatory Certainty Act—exempts blockchain developers from laws written for money transmitters.
- U.S. Virtual Currency Market and Regulatory Competitiveness Act—pledges U.S. government support for cryptocurrency development.
- RESCUE Act for Black and Community Banks—orders U.S. government to report ways blockchain technology can increase investment by lower-income individuals.
- Blockchain Promotion Act of 2019 (Senate version)—orders U.S. government to define what blockchain is.
- Blockchain Promotion Act of 2019 (House version)—orders U.S. government to define what blockchain is.
- H.R. 2144 (bill to be named later)—excludes cryptocurrency from securities laws.
- Stop Senior Scams Act—includes blockchain companies on a committee investigating how to stop financial scams that target seniors.
(I neglected to mention the Senate report ripping bitcoin for its energy consumption.)
Does this mean Congress thinks cryptocurrency is for sex traffickers, drug dealers, and terrorists?
No, but it does mean those are Congress’s biggest concerns right now. Can you blame them for wanting to pause all those pro-crypto bills?
Meanwhile, good, sensible, necessary changes languish in Congressional committees.
Is it any wonder the many of the best cryptocurrency projects are setting up overseas?
Also published on Medium.