It appears that the new (3.5 trillion USD) US infrastructure bill is heading to the floor, and the provision that would amp up crypto taxes was left in – which will make the US an even less attractive location for blockchain development if it is passed into law.
While the crypto portion of the bill isn’t necessarily a large part of the bill from a financial perspective, it could radically alter how blockchain developers view the USA, and also how anyone who is subject to US regulations handles their crypto assets.
A part of the bill would potentially heap crypto wallet makers and miners with added tax burdens. Some fear that the language in the bill could make the crypto markets far less open to authorities, as many crypto holders aren’t a big fan of governments.
Jeremy Sheridan, US Secret Service investigations office assistant director, told the WSJ that the proposed new laws could, “push illicit use and criminal actors deeper into anonymizing methods and corners of the internet that would make it more difficult for law enforcement.”
Sheridan is probably correct – and in addition to people who aren’t career criminals – devs who want a more open business environment could choose to operate in numerous destinations that have little to no crypto regulations.
The Big Money Crypto Trap
Over at DTI Foundation, which is a not-for-profit unit of Etrading Software, crypto tracking codes are being rolled out for most of the most valuable tokens.
For the moment, these codes are being introduced to harmonize crypto infrastructure with legacy infrastructure in the existing financial system, so that crypto assets can be tracked in the same way that other financial assets are.
The specifics of how this system will function aren’t well described – but it is probably a sign of even more involvement by larger financial players.
In the same way that most people don’t own or trade assets like crude oil directly, these new regulations may be working to a world where crypto assets are owned and controlled by bigger institutions, as smaller investors don’t have the capacity to deal with the complexities that exist in the market.
At least in nations that can offer a stable financial system.
Herein exists the paradox – cryptos are becoming popular because central banks are slaughtering the legacy financial system with junk money – and all the big players know it.
When it All Breaks Down
Unfortunately, it isn’t hard to find a modern case study for what happens when a government grossly mismanages its economy, prints too much money, and generally falls asleep at the wheel.
We are – of course – talking about Venezuela.
Is crypto legal in Venezuela?
Could be – it is widely used.
The Petro, otherwise known as the world’s first government backed token, isn’t used by anyone that can avoid it. The same can be said of the Venezuelan Bolivar.
For a government that is devoid of morals or a public conscience, any asset that can be seemingly exploited for gain or power will be – but it just won’t work.
No one outside of Venezuela wants the money, unless they collect hyperinflationary notes, and as far as the Petro goes – it is a terrible joke.
Now, most major central banks are looking at CBDCs as a way to paper over their total lack of competence in operating a fiat currency system, and governments are working to legislate cryptos to the point where they are no longer attractive as an asset class.
When times are good – these kinds of strategies may work. However, when supermarket shelves are empty, and vigilante groups are the only source of law enforcement in urban centers – these gambits are less effective.
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