One of the problems with cryptocurrency is its weird place in the legal landscape. There have been no formal regulations that cover crypto because of its hybrid nature of being in both digital and commercial realms. This has made it difficult for governments to take charge of the industry, something that has slowed down development and integration. However, that may soon change. The United States Congress has several pieces of legislation that may clear things up.
Much of this development was because of Facebook’s announcement of their Libra project. Facebook unveiled its cryptocurrency project in 2019 and received immediate criticism from various governments. One of the main critics was the United States. After seeing Facebook’s bungling of everything from data privacy to social manipulation, the government is wary of giving the tech giant a tool that could destabilise the world of finance.
Among the multiple pieces of legislation moving through Congress, the “Crypto-Currency Act of 2020” is the most interesting one. This Act hopes to create a thorough framework of the digital asset world so that it can receive some proper legislation. It is not the only one though and the legislative effects of them becoming law can be interesting.
A Look At Potential Laws
The “Keep Big Tech Out of Finance Act” is one of the laws that might have some unintended consequences. It aims to keep “big tech” out of the financial markets in hopes of keeping disruptions like Libra to the minimum. Though aimed directly at Libra it can also hit any digital platform maintained by large tech companies.
The definition of “large” for the act is any company that earns more than $25 billion a year. The problem is that the wording can result in blocking out any big company from entering the cryptocurrency market. This can be bad because crypto needs the help of big companies to get adopted.
Another law that can have unintended effects is the “Stablecoins Are Securities Act”. A similar piece of legislation has the same purpose “Managed Stablecoins Are Securities Act of 2019” The main idea behind the law is to have stablecoins be regulated by the Securities Act of 1933. The main result of this act passing is that the complete set of laws that apply to stocks and bonds can apply to stablecoins.
The problem is that stablecoins are also meant to be a currency, which makes them the only currency that the Securities and Exchange Commission has control over. This might end up stifling their development considering how strict the SEC is. Laws like these need a bit more scrutiny if legislators don’t want to end up killing the golden goose.