Why the US is one of the most crypto-friendly countries in the world

In her Expert Take column, Selva Ozelli, an international tax attorney and CPA, covers the intersection of new technologies and sustainability, providing the latest developments around taxes, AML/CFT regulations and legal issues affecting digital assets and blockchain.

It’s fair to say that the US is one of the most crypto-friendly countries in the world. It ranks #1 in the number of Bitcoin and Ethereum nodes, and regulators have taken a special interest in the topic. In September, the administration of President Joe Biden released a series of federal reports that address how crypto might be regulated in the coming year.

Blockchain adoption

As part of these reports, the Office of Science and Technology indicated that the government “has a responsibility” to “protect” communities from the negative impacts of pollution and climate change caused by cryptocurrencies.

President Biden’s Inflation Reduction Act is America’s largest investment ever in reducing greenhouse gas emissions, clean energy and climate resilience. It sets aside about $370 billion for incentives such as green energy tax credits that are intended to jump-start the large-scale development of clean energy technologies and further electrify the digitalization of the United States.

Related: Here’s why Germany is ranked as the most crypto-friendly country

According to a report, applying blockchain technology to electricity microgrids could potentially advance “the techno-socio-economic innovations for restructuring the sustainable energy supply chain” by enabling distributed energy resource coordination.

Ethereum, the most widely used blockchain, recently switched to the more environmentally friendly proof-of-stake (PoS) consensus algorithm through its Merge event. The upgrade improved the network’s sustainability and security and took steps to increase scalability, and the network now offers an attractive return on investment.

A September 2022 report from the Crypto Carbon Ratings Institute reveals that Ethereum’s transition from proof-of-work to proof-of-stake has reduced the amount of electricity the Ethereum network consumes by over 99.988% and its carbon footprint by over 99.992%. This should help the US achieve its climate goals, as described by the Office of Science and Technology: “a 50% to 52% reduction in GHG emissions by 2030, a carbon pollution-free electricity system by 2035, and a net-zero emissions economy by 2050 at the latest. »

Crypto adoption

The crypto market meltdown has attracted some of the biggest asset managers to the digital asset space, including MassMutual and BlackRock — the latter of which launched an investment fund that tracks the price of Bitcoin (BTC), five years after CEO Larry Fink described it. Bitcoin as an “Index of Money Laundering.”

Digital asset firm Securitize Capital intends to tokenize the $491 billion Health Care Strategic Growth Fund II of asset management firm KKR. And Charles Schwab, Citadel Securities, Fidelity Digital Assets and others are launching a new crypto exchange called EDX Markets, set to debut in November.

Crypto exchange Coinbase announced in September that it would financially support a lawsuit against the Treasury Department that claims it went too far when it sanctioned the Tornado Cash crypto mixing service.

The Feds are open to developing a digital central bank currency

The Treasury Department’s Office for Financial Research released a working paper in July 2022 that examined the implications of how a central bank digital currency (CBDC) could affect the stability of the broader banking system. It identified two ways a CBDC can improve financial stability: “First, banks do less maturity transformation when depositors have access to the CBDC, reducing their exposure to depositor runs. Second, monitoring the flow of funds to CBDCs allows policymakers to respond more quickly to periods of stress, reducing the incentive for depositors and other short-term creditors to withdraw assets.”

Meanwhile, the Treasury Department’s September 2022 report “The Future of Money and Payments” examined stablecoins and a CBDC, noting that there is a “natural use case” for a CBDC. The report considers the implications for “building the future of money and payments,” “supporting U.S. global financial leadership,” “advancing financial inclusion and equity,” and “minimizing risk.”

Green NFTs

Expanding on the implications of PoS, John Crain, co-founder and CEO of nonfungible token (NFT) platform SuperRare, told me in an interview: “Artists have always been at the forefront of progressive causes, so proof-of-stake Ethereum is really a game changer when it comes to solving one of the biggest problems in NFT technology. […] We believe this will be a boon for crypto art and expect it will only help the market flourish.”

ConsenSys, founded by Ethereum co-founder Joe Lubin, announced that it would release one of the first sustainable NFT collections on the updated PoS Ethereum network.

Illegal use of crypto

In June 2022, the Department of Justice announced that it had arrested three people in connection with “the first cryptocurrency insider trading tip scheme”. The alleged crimes involved a former product manager at Coinbase.

In September 2022, the department released the report “The Role of Law Enforcement in Detecting, Investigating, and Prosecuting Criminal Activity Related to Digital Assets” and established a nationwide Digital Asset Coordinator Network to advance its “efforts to combat the growing threat posed by unlawful use of digital assets to the American public.”

“As digital assets play an increasing role in our global financial system, we must work together with departments and agencies across government to prevent and disrupt the exploitation of these technologies to facilitate crime and undermine our national security,” said Attorney General Merrick Garland .

Related: The world has synced up on Russian crypto sanctions

Assistant Attorney General Kenneth Polite Jr. of the Justice Department’s Criminal Division said: “Developments in digital assets have created a new landscape for criminals to exploit innovation to advance significant criminal and national security threats at home and abroad.” He added: “Through the creation of the DAC network, the Criminal Division and the National Cryptocurrency Enforcement Team will continue to ensure that the Department and its prosecutors are best positioned to combat the ever-evolving criminal use of digital asset technology.”

Regulation

Developed in accordance with Biden’s Executive Order to Ensure Responsible Development of Digital Assets, the White House recently released a fact sheet outlining a regulatory framework for digital assets to protect consumers by “issuing guidance, increasing enforcement resources and aggressively pursuing fraudulent actors.” “

The Treasury Department’s Office of Foreign Asset Control (OFAC) also updated its guidance for the crypto industry regarding how people and companies can stay in compliance with the sanctions against Tornado Cash, the Ethereum privacy mixer blacklisted due to allegations that North Korean hackers used it for money laundering. funds. The department said people could apply for an OFAC license to withdraw their Tornado Cash-related funds.

Selva OzelliEsq., CPA, is an international tax attorney and certified public accountant and author of Sustainable investment in digital assets globally.

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts and opinions expressed herein are those of the author alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.