Is the US Going to BAN Cryptocurrency?by@elnazsarraf
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Is the US Going to BAN Cryptocurrency?

by Elnaz SarrafMay 8th, 2022
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Lawmakers in Washington D.C. have tried to come up with new and unique ways of controlling or regulating cryptocurrencies. Some have even gone so far as to ask for a *ban* on cryptocurrency in general. There are currently many regulations in place for cryptocurrency, and it’s important for investors to know what those regulations are. In 2022, Joe Biden signed an executive order that was supposed to specifically regulate cryptocurrency in the US for the first time. This could potentially take away a lot of the freedoms that crypto users are generally used to.

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Cryptocurrency is more popular than ever before, and it’s worrying a lot of people in Washington. Since the very beginning of the crypto trend, lawmakers in Washington D.C have tried to come up with new and unique ways of controlling or regulating cryptocurrencies, and some have even gone so far as to ask for a ban on cryptocurrency in general. In this article, I’ll be taking a look at how exactly cryptocurrency is regulated in the United States, what the future of this regulation might be, and what the likelihood of crypto getting banned in the US might be. So, without any further ado, let’s dive in!

As of 2022, cryptocurrency is completely legal in the United States. Anyone is allowed to buy cryptocurrency, sell it, use it as a medium of exchange, or reject it. But, that does not mean that cryptocurrency is completely unregulated. In fact, there are currently many regulations in place for cryptocurrency, and it’s important for anyone who’s looking to invest in cryptocurrency to know what those regulations are. Crypto is generally regulated through laws that already exist, as opposed to laws created specifically for cryptocurrency.

But before I talk about those, let’s take a look at how lawmakers want to regulate crypto in the future. There have been a lot of plans relating to creating specific legislation for cryptocurrency. This could potentially take away a lot of the freedoms that crypto users are generally used to. In 2022, Joe Biden signed an executive order that was supposed to specifically regulate cryptocurrency in the US for the first time.

So far, this executive order would help protect some crypto investors from scams and frauds by creating an actual framework for how “projects” can be made. In short, any crypto project that was created for rug pull or scam purposes, including pump and dump cryptos, could be made illegal in the US. This is great news for a lot of people, but it also worries some other people. This could potentially be the start of a banning game for certain cryptos, and some cryptos might even be used in scams the creators never intended.

The executive order also asked the Financial Stability Oversight Council to find any gaps in the regulation of cryptocurrency. This means all the little loopholes that crypto users take advantage of to avoid regulations and taxes might eventually be found as well. In short, there’s no getting rid of the government.

But the most concerning part of the executive order is the “International Cooperation and U.S. Competitiveness” part. On one hand, it’s aimed to increase exchangeability among cryptocurrencies, but on the other hand, it wants to create a framework to clamp down on cryptocurrencies being used in crimes. In theory, that sounds fine, but the government may be forced to take extreme measures to do so, and this worries many crypto investors.

Regulation isn’t necessarily bad for crypto. In fact, it might actually be good for crypto. You see, no matter how many laws any country makes, it’s impossible to actually control a cryptocurrency. This is because cryptocurrencies are decentralized. By nature, there is no one person or organization that can simply take over and start making decisions. Cryptocurrencies will always be decentralized, but the way people use cryptocurrency is going to be regulated. Why is that good for cryptocurrency? Well, it legitimizes cryptocurrency. With these so-called “regulations” in place, the government is officially recognizing cryptocurrency as a fact of life. It’s something that’s here to stay, and it opens the door for it to become more acceptable than ever before.

But now, let’s take a look at some of the ways the U.S currently regulates crypto with existing laws.

There are many different government organizations that regulate crypto in the US. The SEC, the CFTC, the IRS, and FinCEN. Crypto isn’t the legal tender of the US, as you probably already know, but it can legally be used to purchase other products, it simply can’t be enforced upon vendors. The IRS considers cryptocurrency to be a legal “store of value”, which means that crypto-assets can be taxed under US law. That’s right, you actually have to declare all of your crypto assets in your tax returns, and failure to do so might even result in legal trouble that you do not want to get into.

One of the ways the US regulates cryptocurrencies is through exchanges. Crypto exchanges like FTX, Coinbase, and Binance are all legal in the US, and they all follow guidelines imposed by the Bank Secrecy Act.

But to some people, this regulation isn’t enough. Those people want to put an end to cryptocurrency, and they’re even in the United States Congress. A bill called America COMPETES Act has been tabled in congress by congresswoman Maxine Waters. According to the congresswoman, this bill is aimed at countering the financial influence of so-called bad faith actors like China and Russia. The bill is around 3,000 pages long, and in between those long pages, there are certain things that have crypto investors terrified.

It would basically give the U.S treasury secretary the power to strike down transactions on any crypto exchange out there. It would also be able to stop other exchanges and financial institutions from dealing in cryptocurrency. The aim here is clear, it wants to control — if not put a complete end to — cryptocurrency. The bill doesn’t mention it’s going to outright ban cryptocurrency, but considering the aim is to “counter” Russia or China, and considering it’s so easy for international crypto transactions to bypass sanctions, crypto would likely be a prime target for a ban. Overall, this bill would ban any kind of transaction that is deemed as detrimental to “national interest”.

What’s dangerous about this bill is that it has been concealed as a way to protect the U.S from foreign powers, when in reality, it just wants to control the way people spend their money. In response to the bill, The Blockchain Association sent out a statement saying, “Without this due process, many in the crypto industry fear that it could provide a pathway for a misguided crackdown on the use of cryptocurrencies,”.

Thankfully, the crypto world didn’t really remain silent on the issue. Shortly after the bill was tabled, an amendment was made that removed some or all of the Treasure Secretary’s overreaching powers on crypto exchanges and assets. The bill ended up being passed by the House of Representatives and later by the Senate. It’s officially a part of U.S law now, and even though it initially could’ve ended cryptocurrency in the U.S, it ended up not being that big of an issue for the most part. In fact, it ended up being good for crypto, since it set the tone that the general public will not take something like an outright ban of cryptocurrency lightly. The public pressure proved to be too high, and what’s scary is that a bill like this would’ve been incredibly easy to pass just 5 years ago.

But still, there are many other people in powerful positions that want to put an end to crypto. Whether it’s due to geopolitics, or just a misunderstanding of how crypto works. At this point, you’re probably wondering, what would happen if crypto was banned in the United States after all? What if some other congressman came up with a bill to ban crypto and it was actually passed?

Well, for starters, cryptocurrencies are decentralized. Even if the US bans crypto, the cryptos that have already been created would continue to exist. The real trouble starts when it comes to crypto exchanges. As I already mentioned before, crypto exchanges are regulated in the U.S, and they do everything under U.S law. If the U.S decides to ban crypto exchanges, they would simply stop working inside the United States.

On top of that, all of the crypto you might’ve bought and held in a crypto exchange such as Binance or FTX would also be frozen. The effects of this would even be felt worldwide, as many of these exchanges are also based in the US. But at the same time, cryptocurrency itself would continue to function. There’s absolutely no way to completely stop a cryptocurrency, it’s just too decentralized in nature.

Americans would still be able to find ways to buy and sell cryptocurrencies — at the risk of going to jail, though. To make matters worse, the price of almost every major cryptocurrency on earth would very likely crash in price, since the world’s largest market for crypto would be banning crypto outright. In fact, even when the America COMPETES Bill was tabled, pretty much every crypto across the board saw a slight drop in price. If something like this would actually be passed, it would be an utter disaster.

Thankfully for pretty much everyone, the US is not banning crypto yet. However, it’s important to understand that it came dangerously close to doing so in 2022. The risk of banning or soft-banning cryptocurrency is always there since many clauses can be “hidden” inside of bills. In this case, pretty much the entire crypto community on the internet was able to immediately identify the problems with the bill, and thus exert pressure, and it’s important that this always remains the case.

Do you think lawmakers will make it harder for people to use crypto in the future? Let me know in the comments below! Subscribe to my YouTube channel for more information like this