Leak reveals secret Democratic plan for a game-changing US crypto crash that could hit the price of Bitcoin and Ethereum
05/14 update below. This post was originally published on May 12
BitcoinBTC, ethereum and other major cryptocurrencies have struggled this year with a US crypto crash that some believe could “destroy all the value of bitcoin.”
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Bitcoin price has climbed during the first months of 2023, but remains far from its late 2021 highs, with traders hailing a “new market regime.” The fate of ethereum and other cryptocurrencies, meanwhile, hangs in the balance as US regulatory agencies battle for control of the market.
Now, a leaked memo circulated to members of the Democrat House Financial Services Committee has revealed the “key messages” lawmakers were told to adhere to, which could see almost all cryptocurrencies categorized as securities.
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The document, which was sent to Democratic Party committee members ahead of Wednesday’s joint House hearing on crypto policy, was leaked of Fox Business reporter Eleanor Terrett on Twitter. “The problem isn’t ambiguity — it’s a ton of non-compliance with existing laws,” the memo said. “We cannot invent new accommodating regulatory structures just because crypto companies refuse to follow clear rules of the road.”
The memo calls on Democratic lawmakers to push back on Republican claims “they are working to bring clarity to the markets by handing out space to the Commodity Futures Trading Commission (CFTC) in crypto” … “Republicans are proving they really aren’t serious about to protect investors and consumers.”
Bitcoin, Ethereum and cryptocurrencies have become a partisan political issue over the past year, with high-profile Republicans like Ted Cruz throwing their support behind crypto while influential former Democratic presidential hopeful Elizabeth Warren embraces the idea that she’s “building an anti-crypto army” .
05/14 Update: This week, a 2022 bill was reintroduced before Congress by lawmakers that would require U.S. federal agencies to report on El Salvador’s cybersecurity and financial stability capabilities as part of efforts to combat the use of cryptocurrency as legal tender, claiming that bitcoin can “undermine economic and financial stability and empower malicious actors.”
El Salvador became the world’s first country to make bitcoin legal tender in 2021, with the country’s president Nayib Bukele buying nearly 2,400 bitcoins as part of a plan to make bitcoin a core part of the country’s economy.
“Given the United States’ interest in prosperity and transparency in Central America, we must seek greater clarity on how the use of bitcoin as legal tender may affect El Salvador’s financial and economic stability, as well as El Salvador’s capacity to effectively combat money laundering and illicit finance, “Jim Risch, an Idaho Republican who announced the legislation, told the Washington Examiner.
“Never in my wildest dreams would I have thought that the US government would be afraid of what we’re doing here,” Bukele posted to Twitter last year when the bill was first introduced.
US President Joe Biden issued an executive order last year directing federal agencies to examine how to respond to the bitcoin, ethereum and crypto boom.
Under chairman Gary Gensler, the US Securities and Exchange Commission (SEC) has asserted authority over the crypto market and proposed that it view all cryptocurrencies other than bitcoin as unregistered securities.
“Both the SEC and the CFTC are aligned with the fact that the SEC is the regulator for determining whether cryptoassets are securities, and the SEC has made it clear that almost all cryptoassets are securities,” the memo said, adding: “End of story . “
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Gensler, who has drawn criticism from the crypto community for his “regulation by enforcement” approach, has repeatedly asked Congress for more resources to better monitor the crypto market.
“Republicans want to reverse course and tie the hands of the SEC,” according to the memo. “The SEC must continue to lead the regulation of the US crypto market, and Congress must do its part to provide them with the resources they need.”
The Bitcoin, Ethereum and crypto industries have widely criticized the memo.
“Bizarre that they write something so obviously illegal,” Ari Paul, chief investment officer at BlockTower Capital, posted to Twitter. “The SEC has no authority to determine what is and is not a security under the Act. For them to do so would be a violation of the laws that govern their operations.”
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