Three members of Congress are moving to shield bitcoin and other digital currencies from federal regulation, according to reporting by the Daily Caller and the Hill. The lawmakers are also investigati
Three members of Congress are moving to shield bitcoin and other digital currencies from federal regulation, according to reporting by the Daily Caller and the Hill. The lawmakers are also investigating ways to create a state-backed digital currency that complies with Know Your Customer and Anti-Money Laundering requirements.
A source with knowledge of their efforts described the goal this way: "The centrepiece of the plan is to mainstream digital currency so it can be treated just like the American dollar. First, there is a new entity that is considering issuing a brand new digital currency that is compliant with anti-money laundering laws unlike any other in circulation."
Bitcoin has grown into a $78 billion financial network over the eight years since its creation. Developers, miners, and node operators worldwide maintain and operate the system. This decentralized structure has made bitcoin a reliable store of value and settlement layer. Its fixed supply creates the scarcity that any store of value requires. Traders move $2 billion worth of bitcoin through exchanges on any given day.
A government-issued digital currency would undermine everything that makes bitcoin and Ethereum valuable. Satoshi Nakamoto designed bitcoin as an alternative to traditional banking and centralized financial networks. A blockchain-based currency that satisfies every AML and KYC requirement would operate on a permissioned or centralized ledger. That setup defeats the purpose of blockchain technology. Decentralized systems provide the security and immutability that blockchain requires. Centralized systems cannot.
Andreas Antonopoulos, a bitcoin and security researcher, has explained how blockchain gets misrepresented. During a talk at the Blockchain Africa Conference in South Africa titled "Blockchain vs. Bullshit – Thoughts on the Future of Money," Antonopoulos said: "Blockchain is the technology behind bitcoin. Which is incorrect. Blockchain is one of the four foundational technologies behind bitcoin and it can't stand alone. But that hasn't stopped people from trying to sell it. Blockchain is bitcoin with a haircut and a suit you parade in front of your board. It is the ability to deliver a sanitised, clean, comfortable version of blockchain of bitcoin to people who are too terrified of actually disruptive technology."
Estonia and China have both shown interest in government-backed cryptocurrency. Rather than develop their own blockchains, both countries are testing tokens built on Ethereum. Andrew Keys, head of global business development at ConsenSys, disclosed that China's Royal Mint tested ERC 20 tokens earlier this year as a path toward a national digital currency.
Congress members pushing this legislation want federal law rewritten in bitcoin's favor. One source involved in the effort made the case: "The law needs to be changed to protect digital currencies from federal government harassment to make sure that a complaint currency can be backed by value, the currency cannot be treated like a security or investment, and that transfers are protected against taxation. The bottom line is that Congress needs to remove all the obstacles to a vibrant digital currency that has voluntarily taken the initiative to keep the bad guys from using it."
