Congress could aid Crypto’s professional transformation.
An evolution to professional standards beckons, propelled by the guiding hand of Congress. Representative Patrick McHenry’s proposed legislation stands as a beacon, aiming to forge a structured regulatory landscape for this burgeoning industry. Its final configuration remains a subject of intense scrutiny and anticipation.
Cryptography encompasses a suite of mathematical constructs, encompassing public-key cryptography and game theory, employed for orchestrating networks of individuals and assets.
In the preceding July, the House Financial Services Committee endorsed two significant legislative measures with the intention of formulating a regulatory architecture for the cryptocurrency sector, namely the Financial Innovation and Technology for the 21st Century Act and the Clarity for Payment Stablecoins Act. Despite this, neither measure underwent deliberation in the House that year. However, Congressman Patrick McHenry, the committee’s Chair, expressed optimism at a recent Bitcoin summit, articulating his aspiration for their passage through both chambers of Congress before the 2024 electoral cycle.
While not professing to be a political analyst, I possess ventures that stand to benefit from the legal lucidity delineated in said legislation. (Full disclosure: I am an active participant in cryptocurrency investments and maintain vested interests and advisory roles with firms in this sphere). Presently, diverse institutions are independently adjudicating matters, including the Internal Revenue Service, the Securities and Exchange Commission, the Commodity Futures Trading Commission, the Federal Reserve, and the judiciary.
Disparate rulings emerge from these entities, often complicating the landscape for individuals engaged in cryptocurrency endeavors. A comprehensive framework emanating from Congress, with specified directives allocated to various agencies for elucidating and interpreting distinct issues, would be welcomed by many.
One might presume that progressives, who may not closely monitor developments in cryptocurrency, would generally espouse innovation, whereas conservatives might exhibit skepticism towards non-traditional methodologies. Yet, the dynamics surrounding cryptocurrency defy such assumptions.
A majority of Democrats appear inclined to entrust experts within agencies to address pertinent issues, advocating for a cautious approach by Congress in formulating new regulations. Conversely, most Republicans lean towards curbing the discretion wielded by agencies, opting to afford greater autonomy to the private sector in resolving matters autonomously. Consequently, prospects for legislative passage hinge on a prevailing sentiment favoring deregulation, attracting votes from a broad spectrum of Republicans, bolstered by a handful of Democrats sympathetic to cryptocurrency interests.
A salient aspect to note is that neither piece of legislation directly addresses cryptocurrency per se. Instead, their focus is on delineating the movement of traditional fiat currency into or out of the cryptocurrency ecosystem. Cryptography, as a discipline, comprises a suite of mathematical tools, including public-key cryptography and game theory, instrumental in coordinating networks of individuals and assets.
It is inherently capable of functioning autonomously, devoid of any tether to the traditional economic paradigm — indeed, that is its fundamental essence. However, lacking the means to convert cryptocurrency assets into traditional currency, these networks must be self-sustaining. Participants are compelled to contribute requisite resources — such as developer expertise and server infrastructure — and receive compensation in the form of services rendered by the networks.
For networks, it is more operationally efficient to vend cryptocurrency assets to investors in exchange for traditional currency, utilizing the proceeds to remunerate developers, procure server infrastructure, and finance ancillary network requirements. These investors, in turn, anticipate repayment in conventional currency, often devoid of interest in the services furnished by the network.
Congress could aid Crypto’s professional transformation.
the employment of orthodox capital expedites the progression of cryptocurrency, yet concurrently engenders myriad quandaries. It furnishes avenues for the utilization of cryptocurrency in ransomware, tax elusion, money laundering, and financial deceit. Moreover, it engenders speculative bubbles and market downturns detached from the intrinsic economic worth of services rendered by cryptocurrency. Furthermore, it has the propensity to divert the focus of cryptocurrency endeavors from genuinely innovative and beneficial services sought by genuine individuals to trending sectors anticipated to attract future remuneration from others.
Undoubtedly, currency does not serve as the genesis of malevolence. Even sans ties to the conventional financial framework, cryptocurrency networks can be orchestrated for virtuous or nefarious objectives. They can serve as conduits to combat destitution, inequity, and ecological despoliation, or alternatively, bolster terrorism, illicit undertakings, or autocratic regimes. They can contribute to societal contentment or subjugation, enlightenment or deception. They embody implements, bereft of enchantment beans.
A fitting analogy for contemplation is the dichotomy between amateur and professional athletics. Historically, there was a discernible emphasis on the disparity; extolling the purity and sportsmanship of the Olympics and collegiate sports vis-à-vis the tawdry spectacle-centric professional sports industry orchestrated by profit-driven proprietors enlisting hired players to orchestrate ostentatious public exhibitions for advertisers.
Similarly, a considerable segment of my contemporaneous cohort of cryptocurrency enthusiasts waxes nostalgic about self-reliant cryptocurrency ventures, constructed and utilized by volunteers for reciprocal advantage. They recoil at the hysteria, deception, delusion, criminality, misinterpretation, and avarice that trailblaze the cryptocurrency progression, which many perceive as its quintessence. From this vantage point, the proposed cryptocurrency legislation is perceived as a compact contrived between individuals seeking enrichment through cryptocurrency and those aspiring for jurisdiction over cryptocurrency.
Nonetheless, the realm of significant amateur athletics was never authentic. The amateur regulations were employed to enforce societal strata distinctions and exploit athletes. Governments devised stratagems to remunerate their Olympic athletes, and major collegiate athletics were infamously tainted by corruption.
Congressman McHenry proclaimed during his discourse at the Bitcoin Policy Summit 2024 that Bitcoin was impervious to impediment. However, what truly remains impervious is the infiltration of currency into entities of substantive economic import. Cryptocurrency cannot uphold its amateur status; it necessitates transition into professionalism.
If it is to embrace professionalism, it ought to adhere to a business-like modality with explicit protocols and statutes. I abstain from commentary on the particular stipulations of the measures — purportedly undergoing alterations in ongoing albeit clandestine negotiations — due to vested interests. Nevertheless, the overarching notion that Congress should spearhead the initiative rather than permitting competing agencies to contest the future trajectory of cryptocurrency is commendable.
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Potential investors should carefully consider their financial situation, risk tolerance, and investment objectives before investing in Bitcoin. It is important to conduct thorough research and seek advice from a qualified financial advisor before making any investment decisions.
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