There has been an exponential growth in the popularity of cryptocurrencies – digital assets whose existence is entirely online but can be exchanged for commodities or services. This, in part, is due to the fact that they grant a degree of user confidentiality or anonymity.
However, this anonymity has as well caused headaches for governments, who are worried that cryptocurrencies could grant leeway to such illegal activities as dealing drugs, money laundering, and tax evasion. Cryptocurrencies are at the moment taxed as assets like gold, with capital gains tax due whenever their value appreciates. As of now, there is no particular body appointed to oversee cryptocurrencies in the United States. Instead, there is a division of the responsibility between individual states, the US SEC (Securities and Exchange Commission), the CFTC (Commodity Futures Trading Commission), the Department of Treasury, and the FD (Federal Reserve).
Republican Use of Cryptocurrency
Taking into keen consideration the above-mentioned variables with regard to digital currencies, Republican views on Bitcoin and cryptocurrencies have varied greatly as the currencies have come into the limelight. A notable number of the Republican members have embraced the technology and have even taken steps to fund their campaigns using these cryptocurrencies. An increasing number of candidates are joining the cryptocurrency bubble and as such using digital currencies for purposes of funding their campaign projects. Bitcoin, notwithstanding its dramatic ascent and descent, has surged in fame over time, and an increasing number of politicians are at the moment looking to acquire a piece of the cryptocurrency.
Andrew Hemingway, a member of the Republican Party, set in motion the trend back in 2014. Hemingway’s first introduction to Bitcoin was as a technology entrepreneur. At the age of 32, Hemingway became the youngest candidate vying for the gubernatorial position in the history of New Hampshire, as well as the first Republican to accept Bitcoin contributions. Hemingway indicates that he began accepting Bitcoin due to its demand. A good number of his own voteries requested to contribute in Bitcoin. Approximately 20% of Andrew Hemingway’s political contributions in entirety were made in Bitcoins. “I believe at the time that I ran, New Hampshire had more of what they call ‘bitcoin billionaires’ as compared any other state in the country,” Hemingway said.
New Hampshire, known to be home to the oldest of all Bitcoin meetups, including a couple of crypto-friendly business establishments, has for a long time been in support of Bitcoin, even before it was officially established. This, to a great extent, is as a result of the spirited and growing migration of libertarians to New Hampshire. Established in 2001, the “Free State Project” is purposed to attract up to 20,000 libertarians to New Hampshire. Apparently, a good number of these libertarians tend to be in favor of non-governmental systems of currency such as cryptocurrencies and have the tendency to be early adopters of cryptocurrency.
Even though in the end Hemingway lost his bid for the gubernatorial seat, a long line of Republican politicians have emulated his approach of using digital currencies to fund their campaigns. Take for example, Austin Petersen who is at the moment vying for the US Senate seat from Missouri, whose campaign has this year received a contribution of up to 24 Bitcoins. This is inclusive of a contribution in Bitcoin worth USD 4, 500. As per the records of the FEC (Federal Election Commission), this is the largest contribution in digital currency in the history of federal election.
Senator Rand Paul, a Republican from Kentucky, was the first presidential aspirant to give consent to contributions in Bitcoin. Paul initially expressed how excited he was about the future of cryptocurrencies as a prospective substitution of credit cards. However, the libertarian has as well voiced his cynicism, contending Bitcoin should have real value.
Regulations and Transparency
The Federal Election Commission (FEC) gave consent to Bitcoin contributions back in 2014. It was then ruled that these contributions ought to be treated like “in-kind donations.” Crypto coins are categorized under goods or commodities and services. However, contrary to individual contributions, contributions made in Bitcoin are limited to USD 100.
Despite the existence of these regulations, many are cagey about the transparency herein involved. There still exists an insight amongst the lawmakers that such currencies as cryptocurrencies that are not regulated are swindled for purposes of conducting illegal activities, particularly activities involving money laundering. As much as there has without doubt been reports of cases with regard to this kind illegal activity, the fact that digital currencies bypass the conventional banking system does not mean that these currencies are not legitimate and a secure approach to managing online payments.
For other political aspirants, it is about what digital currencies stand for. It is especially alluring to libertarians, considering they are not fanatics of central banking. It is their belief that money belongs in the hands of the people, and not the Federal Reserve.
“I am a big fan of the digital currency community because of what it represents, which is ultimately decentralization,” Petersen told St. Louis Post-Dispatch.
Another Republican, a member of the Senate Banking Community, Sen. Mike Rounds, was as well engendered to inserting himself in the digital currencies’ debate due to the sprouting fame of these digital assets. While talking to Reuters, Senator Rounds said, and I quote, “while there is no question about the fact that there is a need for a regulatory framework, I see a chance for digital currencies to be regulated as both a commodity and a security.”
Risks of Classifying Cryptocurrency as a Legal Currency
Be that as it may, a good number of Republicans are against the idea of having cryptocurrencies classified as a legal currency by the government. A poll conducted on whether the United States government should classify Bitcoin as a legal currency indicated that 12 percent of Republicans were for the idea while 88 percent were against the idea. Of the 12 percent who were for the idea, 10 percent indicated that as much as they are of the idea of having Bitcoin classified as a legal currency, it should not be a replacement of their national treasury-backed currency. On the flip side, 3 percent of those who were against the idea indicated that Bitcoin would provide too high of a risk for criminal activity, 2 percent thought it should solely be classified as a commodity, and another 2 percent thought Bitcoin has no intrinsic value.
Chuck Grassley, the Chairman of the Security Judiciary and Dianne Feinstein (Ranking Member), alongside Senators Sheldon Whitehouse and John Cornyn, on the 2nd of March this year, introduced a legislation that overhauls and fortifies criminal laws in anticipation of money laundering activities, a dire funding source for drug cartels, terrorist organizations, and other organized crime syndicates. This has a significant impact on the use of digital currencies, given that they could easily be used for these criminal activities considering they grant absolute anonymity to its users.
“Terrorist organizations, drug cartels, and other criminals are actively looking to exploit and harm Americans, whether by attacking our way of life, flooding our country with highly addictive drugs, or defrauding unknowing victims. The recent terrorist attack in the United Kingdom is the latest somber example of how real these threats are to our country and its allies. We must continue to fight them on every front, and that includes going after the profits of crime that are also used to fuel the ongoing activity of these diabolical enterprises. Our bill updates our money laundering laws for the 21st Century,” Grassley said, “Terrorist groups like ISIL and other transnational criminal organizations wouldn’t be able to finance their activities without illegal funds. Blocking these funds is an effective way to disrupt these organizations and prevent crime and terrorism. Our bill adopts many of the recommendations made by the Justice Department to ensure that transnational criminal organizations, including terrorist groups, face consequences for laundering illicit funds, evading laws and promoting criminal activity,” Feinstein said.
Money laundering is commonly used by drug cartels, terrorist organizations, and other organized crime syndicates to falsify their returns or for purposes of funding illegal activities. Even though it is not possible to calculate the exact scale of global money laundering, estimates indicate that the annual aggregate, in terms of dollars, is in the trillions. These criminal organizations make use of various approaches to tuck away and transfer funds beyond borders and through the universal financial system, in their endeavors to elude law enforcement. Inclusive of these techniques are longstanding unauthenticated money transfer systems, for instance, hawalas, and more advanced tools, such as stored-value cards and crypto coins.
So far, despite the insecurities herein involved, the United States government has considered the benefits accompanying this technology and is searching for a way to reduce their risks. Instead of banning the use of cryptocurrencies completely, the United States government has, and continues to work to ensure the best decisions are arrived at. They have, and continue to set up regulations on the use of cryptocurrencies so that while we reap the benefits that come with cryptocurrencies, the insecurities herein involved are alleviated.
Reports are going around that the United States Congress members are making preparations in readiness for the submission of a proposal for a bill meant to protect digital currencies contra the federal government’s interference. The ultimate objective is to foster mainstream adoption of digital currencies while averting their use in undertaking criminal activities. I must say, this is what I would refer to as a win-win situation.
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