Americans are excited about crypto. Who can blame them? Digital currencies promise to eliminate the middleman in all manner of value transfers, starting with financial markets. But no good deed goes unpunished, and federal regulators are growing panicked that their control might be diminished.
The recently passed infrastructure bill in Congress, President Biden’s Working Group report on stablecoins, the Securities and Exchange Commission’s “regulation by enforcement” policy, and the Federal Reserve’s flirtation with a Central Bank Digital Currency (CBDCs) all reveal Washington’s intent to scale back or even kill this blossoming industry.
Government crypto foes warn of systemic risks, insufficient consumer and investor protection, and inadequate reporting. Regulators can supposedly fix these maladies by forcing Americans to bypass wealth opportunities and surrender financial privacy. Instead of private digital currency, they’re eying central bank digital currencies, whereby a public ledger records and monitors all financial transactions. China is already implementing such a system. We’re assured a U.S. version would come with appropriate protections, but Tea Party activists and others who’ve had their taxes leaked over the past few years have cause to disagree.
The recently passed Infrastructure Investment and Jobs Act (P.L. 117-58) is a step toward plenary crypto control. It would potentially force crypto miners and coders into service as government agents supplying Big Brother with transaction information they don’t currently have. The bill would bring new rules that could lump in as “brokers” too many professionals who provide crypto services but do not interact directly with cryptocurrency customers, as Competitive Enterprise Institute senior fellow John Berlau warned in a Forbes commentary.
Treasury Secretary Janet Yellen, chief proponent of the reporting requirements, exhibits scant understanding of how crypto works. Her priority is closing a $7 trillion “tax gap,” and she sees the mostly unorganized, anti-establishment crypto industry as easy pickings. Treasury officials defining and writing crypto rules under this provision could produce disastrous consequences, especially when China’s ban provides the United States a chance to become the world’s leader.
Ideally, Congress’s job is to the check the ambitions of these runaway bureaucrats and constrain public power over the lives of citizens. One bill that would aid those causes is the bipartisan Keep Innovation in America Act, introduced by House Financial Services Committee Ranking Member Patrick McHenry (R., N.C.) and co-sponsored by House members of both parties. The bill would correct the worst crypto provisions of the infrastructure legislation.
Read the full article at National Review.