Is the “Bitcoin law” coming in the United States?

We present a bill to regulate cryptocurrencies

Once again, the possible regulation of cryptocurrencies is back in the news, but this time with a more concrete measure. It is that two senators in the United States presented a broad bipartisan bill that seeks to regulate cryptocurrencies and other digital assets.

However, it is unclear whether the bill proposed by Kirsten Gillibrand, a Democrat from New York, and Cynthia Lummis, a Republican from Wyoming, will pass Congress as the country faces midterm elections this year. However, the promoters of cryptocurrencies are currently in larger, and freer, players within Washington.

Crypto regulation

The Responsible Financial Innovation Law proposes legal definitions for digital assets and virtual currencies. This would require the Internal Revenue Service (IRS), the US tax agency, to adopt guidance on the commercial acceptance of digital assets and charitable contributions, and would make a distinction between digital assets that are commodities or investments.

The bill “creates regulatory clarity for agencies tasked with overseeing digital asset markets, provides a robust and tailored regulatory framework for stablecoins, and integrates digital assets into our existing tax and banking laws,” Lummis said in a statement. send by email. Stablecoins or stable coins are a type of cryptocurrency pegged to a specific value, usually the dollar, another currency, or gold.

Some surveys show that 16% of adult Americans have already invested in cryptocurrencies.

But in addition, it is known that Lummis is in favor of cryptocurrencies. The Democratic senator already has between $150,002 and $350,000 invested in bitcoin, according to her financial statement.

The bill comes at a “complex” time for cryptocurrencies, led by the collapse in May of stablecoin terraUSD and luna, as well as a drop in the price of Bitcoin that fell to as low as $28,000, it is currently at $30,452, according to the values ​​of the CoinMarketCap site.

But beyond the risks and the current panorama of widespread economic uncertainty, some surveys show that 16% of adult Americans, or 40 million people, have already invested in cryptocurrencies.

Treasury Secretary Janet Yellen said in an April speech at American University that more government regulation is needed to police the proliferation of cryptocurrencies and prevent fraudulent or illicit transactions.

What about Bitcoin?

The price of Bitcoin (BTC) moves around $30,106.90 per unit, a figure that is far from the $63,639 per unit on November 10, 2021, but above the u $s28,232 to which he arrived just a week ago.

In this scenario, many investors are wondering: what if the price of BTC fell to zero?

Although this seems like a utopia, especially if one takes into account the significant collapse already suffered, in such a volatile sector anything is possible.

The question was already asked in August 2021 in an article in The Economist.

However, the situation was different when it was published. In that article, in fact, it tells about the consequences that a fall to 0 by BTC would generate, an instance that is still perfectly valid.

In the article, it is explained that this could happen due to a system failure, an attack on a large cryptocurrency exchange or a powerful crackdown by regulators, even in response to interest rate hikes by central banks.

Mohamed El Erian, a specialist at Allianz, specifies in that publication that “there are 3 types of investors in cryptocurrencies: the fundamentalists, who believe that bitcoin will replace fiat money; the tacticians, who maintain that its price will increase as more people buy, and speculators, they just want to gamble and make money.

According to the expert, for the fundamentalists a big drop would be a big surprise, but those in the third group would be the first to flee. In turn, he suggests that, in order to avoid the general stampede, investors of the “tactical” type would have to be convinced.

How would the miners respond? If an accident destroys the crypto economy, he argues that miners would have much less incentive to continue, which would stop the verification process.