The key crypto bills in Congress
Several bipartisan bills aiming to provide regulatory clarity for crypto are working their way through Congress. [Image via Caleb Perez]
There’s never a dull moment on the blockchain. Here’s what you need to know this week:
Crypto bills are gaining momentum in Congress. We’re taking a closer look at some of the most recent and potentially consequential pieces of legislation.
Key cryptoverse quotes Terra founder Do Kwon comments on the infamous collapse of his algorithmic stablecoin and other soundbites from the week.
Noteworthy numbers The rapidly growing amount of professionals with blockchain jobs and other key stats to know.
BILLS BILLS BILLS
A closer look at the the biggest crypto bills in Congress
While the last several months of crypto headlines have focused primarily on plummeting and recovering prices, the evaporating liquidity of some crypto firms, and, more recently, enforcement by U.S. regulators (more on this later) — one overlooked theme has been the ever-growing number of crypto bills gaining momentum in the U.S. Congress. According to Forbes, at least 50 (!) digital asset bills and resolutions have been proposed in the last year, not to mention President Biden’s March executive order to create a legal framework for crypto. This week, we’re taking a closer look at some of the most recent proposed legislation. Let’s dig in.
Earlier this month, Sens. Debbie Stabenow (D-MI) and John Boozman (R-AR) introduced a bill recognizing both BTC and ETH as digital commodities. The bill gives the Commodity Futures Trading Commission (CFTC) jurisdiction over “digital commodities,” and defines that term to broadly capture potentially a lot more than just the top-two cryptocurrencies. The Digital Commodities Consumer Protection Act would create federal standards for crypto commodity trading and help clarify how crypto commodity spot markets should work. So far, the bill has been met favorably by most of the crypto industry, as well as consumer groups.
In June, Sens. Cynthia Lummis (R-WY) and Kirsten Gillibrand (D-NY) proposed a bill which they described as a “complete regulatory framework for digital assets.” Their Responsible Financial Innovation Act would also classify many cryptocurrencies as commodities; create tax exemptions for crypto transactions up to $200 as well as for miners’ block rewards; require stablecoins to be fully backed by “high-quality liquid assets” like U.S dollars; and ask the Treasury Department to study potential use-cases of DeFi. The crypto industry's response was largely positive for this bill, too. Sheila Warren, CEO of Crypto Council for Innovation said the bill could help the U.S. “retain its leadership role as a global innovator.”
There are also two bipartisan bills focused on stablecoins and crypto transaction taxes that are in the legislative pipeline. At the end of July, Sens. Pat Toomey (R-PA) and Kyrsten Sinema (D-AZ) introduced a bill that would exempt crypto transactions under $50 from capital gains taxes. Meanwhile, House Financial Services Committee Chairwoman Maxine Waters (D-CA) and Ranking Member Patrick McHenry (R-NC) are negotiating a bill — now delayed until after August — that would establish federal oversight of stablecoins. While the details are still being worked out, the bill is expected to provide a path for nonbanks (like Circle, which issues USDC) as well as banks to become regulated stablecoin issuers. Approved firms would also need to fully back stablecoins with highly liquid assets like cash or short-term government debt. (Read Coinbase’s latest stablecoin research.)
Why it matters… Over the last several weeks, you may have caught headlines about the SEC’s allegations that certain cryptocurrencies are securities (read here why Coinbase doesn’t list securities), or seen stories about the U.S. Treasury Department sanctioning a virtual currency mixer called Tornado Cash — a mixer is a neutral piece of code that enhances privacy while transacting, which can be needed, for example, to safely provide support to particular causes (more on that below in Takes). Though the details in each instance are different, some have criticized these actions as regulation by enforcement, or resolving regulatory questions through litigation instead of the typical rulemaking process that engages with the public and experts. Only time will tell how crypto regulation develops in the U.S. and around the world.
TAKES
Terra’s Do Kwon on UST’s infamous collapse, and other key quotes from across the cryptoverse
Terra apologia... “I bet big and I think I lost,” was how Terraform Labs co-founder Do Kwon described the now-infamous collapse of Terra’s algorithmic UST stablecoin in an interview with Coinage Media, released on Monday. Earlier this summer, Kwon had defended himself in the Wall Street Journal by saying “my actions 100% match my words. There is a difference between failing and running a fraud.”
Monkey business…“While Web3 is making a lot of attempts at finding other ways of communicating with people, if you're trying to hit email,you're kind of stuck with platforms like Mailchimp,” was the reaction of Edge Wallet CEO Paul Puey after his company’s account was suspended from the well-known email marketing platform, along with the accounts of crypto research firm Messari and crypto news site Decrypt, among others. As Decrypt notes, this is not the first time Mailchimp has removed reputable crypto companies from its platform, nor is it alone among major email service providers in restricting crypto company communications. Messari founder Ryan Selkis’ reaction to the suspension illustrated a key motivator for moving from a centralized web2 toward a decentralized web3: “You're proving our point. Mailchimp—and all speech censors—must be destroyed.”
In the mix… “I'll out myself as someone who has used TC to donate to this exact cause,” said Ethereum Co-Founder Vitalik Buterin about a donation he had made to support Ukraine using crypto mixer platform Tornado Cash. In the wake of the U.S. Treasury Department’s sanctions against Tornado Cash for allegedly laundering ill-gotten funds, the ability to maintain anonymity when donating to causes such as Ukraine was pointed to as one of the important use cases for mixer platforms.
NUMBERS TO KNOW
58,750 x 10^18
That is (approximately) how many hashes are left to mine on Ethereum’s proof-of-work network as the blockchain prepares to execute its long-awaited “merge” to a proof-of-stake network. Given the current hash rate, the merge is predicted to take place on September 15, 2022. As JPMorgan noted in a recent research report, “the role of miners will effectively end when the transition takes place.”
76%
The global percentage increase of LinkedIn members working in the blockchain industry compared to last year, according to a new report from the professional social network and crypto exchange OKX. The report found that the U.S., India, and China lead the field for global blockchain talent, while the U.S., China, and France are the top three countries in terms of demand for blockchain talent.
1
The number of crypto-and-metaverse-related trademark applications filed jointly by powerhouse Spanish football clubs (and archrivals) Barcelona and Real Madrid covering their plans for everything from e-wallet software to virtual clothing. The La Liga giants are part of a growing trend of football clubs, and footballers, submitting such applications — earlier this year French club Paris Saint-Germain (home to superstars Lionel Messi, Neymar and Kylian Mbappe) made a similar crypto and web3-focused trademark filing, as did England legend David Beckham.
AROUND COINBASE
Updates on the Ethereum merge, USDC, and Bitcoin’s Lightning Network
With the Ethereum merge fast approaching, here’s a guide to what users can expect from Coinbase when the merge takes place (TL;DR: no action is required on your part!).
Stablecoins are a critical part of creating a more open financial system. That’s why Coinbase co-founded the Centre Consortium, to invest in the build of USDC, the second largest stablecoin by market capitalization. Learn more about Coinbase’s thinking on USDC with this article from our company blog.
The Lightning Network is a layer-2 protocol built on top of Bitcoin that can, theoretically, enable millions of instant transactions per second at little cost, overcoming a major Bitcoin network limitation when it comes to scalability. But how likely is the Lightning Network to achieve this goal? The latest deep dive from Coinbase Ventures’ Around the Block unpacks the question.
Chief Product Officer Surojit Chatterjee joined Laura Shin’s Unchained podcast to discuss how Coinbase is integrating its main app with web3 and how crypto can become a utility asset rather than simply a tradable asset. Listen here.
TOKEN TRIVIA
What was the name of Ethereum’s first testnet merge?
A
Goerli
B
Ropsten
C
Sepolia
D
2ETH 2Furious
Find the answer below.
Trivia Answer
B
Ropsten
