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    William B
    New Crypto Bill in US Congress Is the Most Comprehensive Yet. Rep. Don Beyer (D-Va.)’s bill would allow the Treasury Secretary to veto the creation of stablecoins, direct regulators to define rules for decentralized finance (DeFi) and possibly create a charter for crypto exchanges, among other measures.

    The 58-page “Digital Asset Market Structure and Investor Protection Act,” which Beyer introduced Thursday, seeks to create an exhaustive regulatory regime for digital assets. It would do so in part by defining which sorts of cryptocurrencies might be securities, which can be treated as commodities, and bolster tax data collecting for reporting purposes. As such, the bill seems to address a long-standing desire from the industry for regulatory clarity. But where other bills have attempted to address these issues piecemeal, this one covers multiple issues in one fell swoop. It appears to have been thoroughly researched, even if certain provisions rankled crypto supporters.

    It’s unclear what sort of support the bill has, or what a possible timeline for its passage might look like, but its breadth and depth have raised eyebrows in crypto policy circles.

    “For a proposed legislation that seemingly came out of nowhere, it is incredibly comprehensive and the authors clearly have an understanding of the underlying technology,” said Marc Goldich, a partner at the law firm of Axler Goldich LLC. “It’s going to take some time to unpack and see how it could impact the industry and it will be interesting to see if this bill has legs, but this is the most well-written draft of crypto legislation to date.”

    It also comes from a surprising source. Beyer is the chairman of Congress’ Joint Economic Committee and a member of the tax policy making House Ways and Means Committee.

    The bill also appears to authorize the Federal Reserve, the U.S.’s central bank, to create a central bank digital currency (CBDC), likely in response to statements from Fed officials saying they weren’t sure they had the authority to do so under its current mandate.

    Beyer’s bill, the second legislative proposal around cryptocurrencies this week, comes as lawmakers in the U.S. become increasingly active in the digital asset space. On Tuesday, lawmakers held three different hearings that touched on digital assets. Many of the elected officials expressed skepticism about the industry or different facets, discussing consumer protection concerns or pointing to perceived risks to financial stability.

    In the Senate, a bipartisan infrastructure bill currently includes a provision that seeks to raise $28 billion by enforcing a broader set of information reporting requirements for crypto users than the U.S. currently has.

    However, this plan remains a narrowly focused part of the infrastructure bill. Beyer’s proposal, in contrast, is all about crypto, and would likely need a co-sponsor on a committee with market jurisdiction (Senate Banking or House Financial Services) to go anywhere.

    Under the terms of Beyer’s bill, the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) would have to more firmly define what aspects of the crypto market fall under their respective jurisdictions.

    The first section lays out where the SEC’s oversight is focused: if passed, the bill would create a definition for “digital asset securities,” referring to cryptocurrencies or tokens that provide holders with any sort of equity.

    If a holder has a right to equity, profits, interest, dividend payments or voting rights, the token would fall under the bill’s definition of a digital asset security.

    The term would also apply to tokens issued through an initial coin offering (ICO) meant to fund the development of a product or platform.

    The bill also would add digital asset securities to the Securities Exchange Act of 1934’s provision on registration with the SEC and exemptions from such requirements.

    Perhaps most importantly, however, is a provision on “desecuritization.” The section lays out a path for a token that is treated as a digital asset security to become a cryptocurrency that will not be treated as a security, echoing SEC Commissioner Hester Peirce’s longstanding efforts to create a safe harbor for crypto projects to get off the ground.

    “Registration of any class of digital asset security pursuant to this subsection or status as a security (or both) shall be terminated ninety days, or such shorter period as the Commission may determine, after the issuer files a desecuritization certification with the Commission,” the bill reads.

    Beyer’s bill says the SEC should evaluate any such application against the criteria for a digital asset security laid out in the section. Cryptocurrencies that don’t fall under the SEC’s jurisdiction would fall under the CFTC’s, according to the bill.
  • h
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  • R
    I still think buying a home is the best investment any individual can make..
  • W
    William B
    Wyden wants tweaks to infrastructure bill’s cryptocurrency rules
    Senate Finance chair concerned about impact to blockchain technology developers. Senate Finance Chair Ron Wyden wants tweaks to provisions for enforcing taxes on cryptocurrency transactions that were tucked into the bipartisan infrastructure bill on the floor in that chamber this week.

    Changes could come in a manager’s amendment to the bill, which consists of a series of adjustments that senators typically agree to ahead of time, according to an aide to the Oregon Democrat.

    Wyden, who leads the chamber’s tax-writing panel, wants to be sure it’s clear the rules don’t apply to blockchain technology developers that may face difficulty complying, a problem that cryptocurrency lobbyists have highlighted in the days since draft text of the proposal began to circulate.

    “Americans avoiding paying taxes they owe through cryptocurrency is a real problem that deserves a real solution,” Wyden said in a series of tweets Sunday, hours before senators unveiled the draft bill text. “The Republican provision in the bipartisan infrastructure framework isn’t close to being that solution. It’s an attempt to apply brick and mortar rules to the internet and fails to understand how the technology works.”

    Wyden supports reporting rules for cryptocurrency exchanges, which is what the provisions aim to do, according to an aide. His concern is that the language lacks clarity and could mean that developers of blockchain technologies such as wallets, which allow users to manage different crypto transactions, have to provide information to the IRS, which could pose technological challenges and cause unintended consequences. Wyden hasn’t ruled out putting forward his own amendment as a fix.

    He’s not alone in aiming to adjust that portion of the bill. Sen. Patrick J. Toomey of Pennsylvania, the top Republican on the Senate Banking Committee, said Monday that he'd propose an amendment to address similar concerns, describing the text as “unworkable.”

    Toomey, who cryptocurrency groups have described as receptive to the industry, voted against starting debate on the broader infrastructure package but hasn't said how he'll ultimately vote on the underlying bill.

    “Congress should not rush forward with this hastily-designed tax reporting regime for cryptocurrency, especially without a full understanding of the consequences,” Toomey said in a statement. “By including an overly broad definition of broker, the current provision sweeps in nonfinancial intermediaries like miners, network validators, and other service providers. Moreover, these individuals never take control of a consumer’s assets and don’t even have the personal-identifying information needed to file a 1099 with the IRS.”

    Toomey is also concerned the bill would allow the Treasury secretary to define a digital asset with broad discretion, according to an aide, who noted it's the first time a digital asset will be defined by law.

    Amendment process underway
    Senators were set to begin amending the package on Monday night after its provisions were finalized and revealed late Sunday, pressing to pass the bill before the August recess.

    The lead Republican negotiator for the infrastructure deal, Sen. Rob Portman of Ohio, said in recent months that he was preparing a bill to increase reporting on transactions involving digital assets such as Bitcoin and Ethereum, and to better define the area for tax purposes.

    Crypto provisions emerged as a way to offset $28 billion of the package’s $550 billion in new spending for roads, highways, bridges and other infrastructure projects as senators finalized a deal over the last week.

    The final bill would require business transactions involving more than $10,000 in cryptocurrency to be reported to the IRS, adding digital coins to mandates that already exist for large cash payments.

    It would add businesses facilitating digital coin trades to the definition of "brokers" who are required to report information to the IRS. That’s the piece of the proposal that's generated the most pushback, with industry groups saying it would ask some intermediaries for information they don’t have and risk pushing the cryptocurrency industry to leave the United States.

    Starting in 2024, anyone who regularly provides services for transferring digital assets on behalf of others would be added as a broker to rules that require reporting information to the IRS. The Treasury proposal described broker reporting as allowing the U.S. to get involved in automatic global sharing of information on cryptocurrency transfers, which would mean the U.S. could get information on taxpayers’ transactions outside the U.S. in return.

    Tweaks from earlier drafts
    Senators appear to have edited the bill from earlier draft versions that circulated late last week. Earlier drafts specified that broker reporting would apply to decentralized exchanges, peer-to-peer marketplaces and noncustodial services,
  • W
    William B
    New law in Germany has been adopted, permitting more than 4,000 institutional investment firms to invest billions in cryptocurrency assets. A legislation that goes into effect on Monday would allow so-called Spezialfonds (special funds) with pre-determined investing guidelines to invest in digital assets. Companies would be permitted to invest up to 20% of their capital in crypto assets.Spezialfonds, for example, are only available to institutional investors such as insurance and pension funds. They handle about #$%$1.8 trillion ($2.1 trillion) in assets, zero of which are in cryptocurrency. As a result, if they invest up to their legal maximum, the cryptocurrency market may see up to $422 billion in investment.The use of cryptocurrencies by institutional investors has risen dramatically in the last year. The value of crypto assets has continued to climb, with a tiny number of wealthy individuals controlling the majority of assets.As the cryptos become more well-known, more of these investors are interested in getting involved. The law was enacted by Germany?s federal parliament, the Bundestag, and it will be announced by the country?s Federal Council as soon as possible.Frank Sch�ffler, a lawmaker, believes the new legislation will widen adoption of the new assets.
  • W
    William B
    Cryptocurrency organizations have asked Congress to reconsider language in the Senate's infrastructure bill that posed an "imminent threat" to the industry. "What Congress is considering with this measure is not a new tax on the cryptocurrency industry. Instead, it puts new reporting requirements on individual players in the industry who have no way to comply." Kristin Smith, the association's executive director, said in a Thursday statement that the crypto industry was "eager" to see updated guidance for exchanges' reporting to the IRS. But the bill's language was "hastily drafted," she said.

    Jerry Brito, executive director of the Coin Center thinktank, said the draft language was "so broad" that it would add new reporting for many organizations that "have no visibility into users' transactions."

    Smith added: "So not only will these types of reporting requirements push businesses and jobs overseas - ceding American leadership in the crypto space to our international competitors - it won't collect the $28 billion Congress thinks they'll bring in."
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    William B
    The Cryptocurrency Surveillance Provision Buried in the Infrastructure Bill is a Disaster for Digital Privacy. The mandate to collect names, addresses, and transactions of customers means almost every company even tangentially related to cryptocurrency may suddenly be forced to surveil their users.

    How this would work in practice is still very much an open question. Indeed, perhaps this extremely broad interpretation was not even the intent of the drafters of this language. But given the rapid timeline for the bill’s likely passage, those answers may not be resolved before it hits the Senate floor for a vote.

    Some may wonder why an infrastructure bill primarily focused on topics like highways is even attempting to address as complex and evolving a topic as digital privacy and cryptocurrency. This provision is actually buried in the section of the bill relevant to covering the costs of the other proposals. In general, bills that seek to offer new government services must explain how the government will pay for those services. This can be done through increasing taxes or by somehow improving tax compliance. The cryptocurrency provision in this bill is attempting to do the latter. The argument is that by engaging in more rigorous surveillance of the cryptocurrency community, the Biden administration will see more tax revenue flow in from this community without actually increasing taxes, and thus be able to cover $28 billion of its $2 trillion infrastructure plan. Basically, it’s presuming that huge swaths of cryptocurrency users are engaged in mass tax avoidance, without providing any evidence of that.

    Make no mistake: there is a clear and substantial harm in ratcheting up financial surveillance and forcing more actors within the blockchain ecosystem to gather data on users. Including this provision in the infrastructure bill will:

    Require new surveillance of everyday users of cryptocurrency;
    Force software creators and others who do not custody cryptocurrency for their users to implement cumbersome surveillance systems or stop offering services in the United States;
    Create more honeypots of private information about cryptocurrency users that could attract malicious actors; and
    Create more legal complexity to developing blockchain projects or verifying transactions in the United States—likely leading to more innovation moving overseas.
    Furthermore, it is impossible for miners and developers to comply with these reporting requirements; these parties have no way to gather that type of information.

    The bill could also create uncertainty about the ability to conduct cryptocurrency transactions directly with others, via open source code (e.g. smart contracts and decentralized exchanges), while remaining anonymous. The ability to transact directly with others anonymously is fundamental to civil liberties, as financial records provide an intimate window into a person's life.

    This poor drafting appears to be yet another example of lawmakers failing to understand the underlying technology used by cryptocurrencies. EFF has long advocated for Congress to protect consumers by focusing on malicious actors engaged in fraudulent practices within the cryptocurrency space. However, overbroad and technologically disconnected cryptocurrency regulation could do more harm than good. Blockchain projects should serve the interests and needs of users, and we hope to see a diverse and competitive ecosystem where values such as individual privacy, censorship-resistance, and interoperability are designed into blockchain projects from the ground up. Smart cryptocurrency regulation will foster this innovation and uphold consumer privacy, not surveil users while failing to do anything meaningful to combat fraud.

    A few key concepts we’ve urged Congress to adopt when developing cryptocurrency regulation, specifically that any regulation:

    Should be technologically neutral;
    Should not apply to those who merely write and publish code;
    Should provide protections for individual miners, merchants who accept cryptocurrencies, and individuals who trade in cryptocurrency as consumers;
    Should focus on custodial services that hold and trade assets on behalf of users;
    Should provide an adequate on-ramp for new services to comply;
    Should recognize the human right to privacy;
    Should recognize the important role of decentralized technologies in empowering consumers;
    Should not chill future innovation that will benefit consumers.
    The poorly drafted provision in Biden’s infrastructure bill fails our criteria across the board.

    The Senate should act swiftly to modify or remove this dangerous provision. Getting cryptocurrency regulation right means ensuring an opportunity for public engagement and nuance—and the breakneck timeline of the infrastructure bill leaves no chance for either.
  • W
    William B
    Institutional interest in Bitcoin shows no sign of slowing down as the $25B investment firm Wealthfront is allowing its clients to now invest in Grayscale's $GBTC and $ETHE.
  • f
    We Passed On Robinhood IPO (NASDAQ: HOOD), While Adding $5k Of Coinbase Global: (NASDAQ: COIN) [New Pick On Monday]
    We Passed On Robinhood IPO: $HOOD, While Adding $5k Of Coinbase Global: $COIN [New Pick On Monday]
  • T
    Anyone also owns ETHE?
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    William B
    When the Chinese had a forced liquidation out of ₿itcoin to finance their move, it presented an awesome opportunity for retail investors to buy more G₿TC shares at a DISCOUNT. The DISCOUNT, however, is shrinking as ₿itcoin climbs and it soon will be gone. Instead of complaining, people (Raymond, etc.) should have been adding more shares.

    When G₿TC is converted to an ETF next year, the new shares will trade on par with ₿itcoin and their will NOT be any complaining about a lack of correlation. Instead people will complain that there is NO discount or premium, just to be complaining!!!! Some people have no patience or foresight just to look a few months ahead and trust the process or deal with the present circumstances productively.
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    William B
    "Tesla could resume accepting Bitcoin soon was another major revelation made by Musk at The ₿ Word event that took place last month."
  • W
    Amazon on Monday denied a report that the e-commerce giant planned to begin accepting Bitcoin payments by the end of this year, but acknowledged an interest in cryptocurrency.

    City AM cited as unnamed insider as saying Amazon would start taking cryptocurrency, citing a recent job posting by the company for someone with digital currency and blockchain skills.

    Contacted by AFP, an Amazon spokesperson said information in the story was "fabricated," but that the company does have its eyes on the cryptocurrency sector.

    "Not withstanding our interest in the space, the speculation that has ensued around our specific plans for cryptocurrencies is not true," the spokesperson said.
  • W
    William B
    I am a believer that ₿itcoin is primarily an asset, and its acceptance as a currency will become much greater when its volatility recedes greatly in the future. Having said that: Can you imagine all the socio economic energy of all the FIAT currency in the world squeezed into 21 million ₿itcoin?
  • W
    William B
    People quickly forget that the government bailed out banks and let people lose their homes and ₿itcoin was born. Either ₿itcoin is going to replace the banking system or the banks are going to adopt, adapt and plug into it. Regulation might slow the adoption down, but it will not stop the ultimate outcome.
  • W
    William B
    "Bitcoin is the first store of value in history for which its supply is entirely unaffected by increased demand. From this perspective, Bitcoin is better at being gold than gold – it’s even more salable across time.

    Do not confuse the speed of your Visa payment with its final settlement. No settlement occurs when you buy your coffee at Starbucks. Rather, your bank and Starbucks’ bank generally settle 2-3 days later, with each bank taking credit risk to the other along the way, with rare, but occasionally disastrous results. Bitcoin safely settles about every hour and, as a bearer instrument, credit risk is not a concept. Bitcoin is better at being fiat than fiat – it’s even more salable across space and, because it’s not debt like fiat, has no credit risk.

    Suppose Bitcoin’s price rises, creating an incentive for more Bitcoin miners to mine (remember, successful mining results in Bitcoin rewards, thus the continuous link between Bitcoin’s price and the total worldwide
    mining incentive). In this case, the Bitcoin protocol will automatically raise the difficulty of mining, such that the creation of new Bitcoin, and the timing of transaction verification, does not accelerate beyond its preset
    schedule (about every 10 minutes). Instead, suppose Bitcoin’s price falls, and subsequently higher marginal cost Bitcoin miners rationally turn off their machines. The Bitcoin protocol will automatically reduce the difficulty of mining, such that the creation of new Bitcoin, and the timing of transaction verification, does not decelerate below its preset schedule. Just as Satoshi designed, no matter the global mining capacity, or its variability, a new block is verified every 10 minutes…every 10 minutes…every 10 minutes.

    First, the principle: Bitcoin is a better technology for performing central banking than the current government monopolies on central banking. Second, the practice: Bitcoin mining is the only profitable use of energy in human history that does not need to be located near human settlement to operate.

    Free money has consequences. Because it is not free. No matter how well-intentioned, runaway global money printing, and the resulting financial repression, is society’s largest global challenge. When the Fed creates $3 trillion in a matter of weeks by pushing a button, it consolidates the power to price and value human time. In our country, humans are not supposed to have that kind of power over other humans.

    “There are two ways to enslave a country. One is by the sword. The other is by debt.”– John Adams (1826)

    --From 2020 Stone Ridge Holdings Group Shareholder Letter, parent company of NYDIG
  • W
    William B
    This quote should have motivated the world to buy Bitcoin:

    “There is an infinite amount of cash in the Federal Reserve.”
    - Neel Kashkari, President of the Federal Reserve Bank of Minneapolis, March 22, 2020
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    William B
    Commissioner Hester M. Peirce---"Newly minted retail investors quickly discover that a huge swath of the market is off limits to them. Private markets, which are not subject to the disclosure mandates applicable to the public markets, are the gated domain of wealthy individuals and institutional investors. Under the Commission’s accredited investor definition, an individual investor who wants to invest in companies making a private offering generally needs more than a million dollars in net worth, excluding her house, or an annual income above $200,000 (or above $300,000 for a couple). The Commission’s view has been that wealthy individuals are likely to be more sophisticated about financial matters and are better able to bear the risk of loss from these investments.

    The problem with this standard is pretty obvious. Even if you disagree with my view that the government should not be in the business of telling Americans how to spend or invest their hard-earned money, you likely agree that wealth or income is not always linked to financial sophistication or investing prowess. The accredited investor definition, however, would treat a third-year associate at a large law firm, after the most recent pay increases, as having greater financial sophistication than a professor of business with years of teaching and research experience. Investment opportunities open to a wealthy heir who has never worked a day in her life might be closed to a middle-class investor who has been managing her own investments for a couple of decades.

    We recently tweaked the rules to enable investors to qualify as accredited investors based on defined measures of professional knowledge, experience or certifications in addition to the existing tests for income or net worth, but, to date, these changes have been limited to a few select financial professionals. Moreover, the SEC has announced plans to explore updating the financial thresholds in the accredited investor definition so that presumably even fewer Americans will qualify. The accredited investor rules are not the only barriers to the private markets for non-wealthy Americans. The Qualified Client and Qualified Purchaser rules under the Investment Advisers Act and Investment Company Act, respectively, play a similar gating role.

    Essentially, then, most Americans cannot participate in the private markets. Disparate treatment of individuals on an arbitrary basis—how rich you are—should strike us as unjust in any area of the law, but in this context it has particularly pernicious effects. The number of public companies has fallen dramatically over the last three decades. Companies are waiting longer to go public, so more and more of the growth and portfolio diversity are out of reach for retail investors. Individuals who do not meet the accredited investor standard are increasingly deprived of the opportunity to participate in these potentially significant early gains...."
  • A
    Great week for GBTC. Up 27.77% for the week. Up 8.56% for YTD. Today's gain outpaced BTC 1.73% vs. 0.36%.
  • W
    William B
    The price of bitcoin just jumped higher by $3K in a minute. The opposite of a flash crash is occurring. Instead of there being a bunch of forced liquidation of long positions that are over leveraged, there is a forced liquidation of short positions that are over leveraged. The exchanges are buying bitcoin to cover short positions against the wishes and many shorts are going to lose their initial investments. I told you that this was coming in an earlier post.