Congress Needs A Digital Asset Class

Watching these members of congress discuss cryptocurrency is almost as bad as watching CNBC report on it. To anyone who even has a basic understanding of the technology behind Bitcoin, it’s painfully obvious how little these people actually comprehend regarding what is transpiring in the crypto space. It’s scary to think that these people have been tasked with creating powerful legislation, the framework for how the entire ecosystem must operate, without even a basic understanding of how it works. Luckily, there is power in numbers, and there are at least a few select individuals who recognize the lack of intelligence that exists in the group tasked with tackling this legislative challenge. Congressman Tom Emmer openly berated the “elected officials who don’t have any concept of what we’re dealing with here” who are excited to “run in and regulate and create more government infrastructure”.

Though discussion on the congressional floor is a good step toward making meaningful progress, I believe we need to take a step back before we can move ahead. Members of congress who will be involved in the decision making at this level need first to be educated on the subject matter. If the goal is to effectively legislate to protect investors while encouraging healthy innovation, a deep understanding of the entire digital asset economy will most certainly be required. Once of the primary decisions is how to classify these digital assets — are they property as the IRS defines, commodities as the CFTC believes or are they considered securities as the SEC has outlined? Are they currencies? Do all digital assets have to fall into one class (and thus be regulated by one body) or is it possible that different digital assets could (and should) be classified differently depending on their structure, governance and utility? Do these members of congress even understand what network governance means? If a coin or token is considered to be a commodity and regulated as such, does the same coin become a security if it is used as collateral for a masternode which pays out a distribution? How many members of congress have even heard of a masternode, let alone understand how its structure may impact how they evaluate how they classify the underlying token?

Until the decision makers are properly educated, the US will not make any meaningful progress on any proposed legislation. The lack of clarity on what existing laws apply and how they will be enforced is a major risk for any company involved with this space actively doing business in the US. With legislative uncertainty, it becomes difficult to make important investments as a business. This will motive these blockchain companies and innovative teams to relocate to more loosely regulated nations where they can feel confident that their technological develops won’t be stifled by ignorant politicians. If the US truly wants to create effective regulation and lay the groundwork for other developed countries for global standards, the first step is to educate our lawmakers.

Author: El Crypto Chapo (www.twitter.com/el_crypto_chapo/)