For discussing regulatory frameworks for cryptocurrencies and blockchain, the U.S. Senate Committee on Baking, Housing and Urban Affairs, organized a hearing on last Tuesday. Several experts and influencers attended the session and participated in the hearing titled “Examining Regulatory Frameworks for Digital Currencies and Blockchain“.
During the hearing, the chairman of the Senate Banking Committee, Mike Crapo, shared his perspectives as well. Surprisingly, Crapo admitted that the country wouldn’t be able to successfully ban bitcoin, the world’s biggest decentralized cryptocurrency by market cap.
He didn’t favor the ban but rather clarified that if due to some reason, banning bitcoin becomes necessary, the United States couldn’t control bitcoin. While conversing with Mr. Jeremy Allaire, co-founder and CEO of Circle, Crapo said:
If the United States were to decide — and I’m not saying that it should — if the United States were to decide we don’t want cryptocurrency to happen in the United States and tried to ban it, I’m pretty confident we couldn’t succeed in doing that because this is a global innovation.
Allaire responded to Crapo’s take by giving his perception of bitcoin. According to Allaire, cryptocurrencies are just some pieces of open-source software that exist on the internet. He believes that anyone can generate these algorithmically programmed currencies which are then made accessible to all internet users.
Moreover, he outlined that the easy access of cryptos such as bitcoin is the very reason for governments facing challenges. In this regard, his exact words read:
That is a challenge that every government in the world now faces — that money, digital money, will move frictionlessly everywhere in the world at the speed of the internet.
A few weeks ago, the member of the Financial Services Committee and a U.S Rep., Patrick McHenry also shared his thoughts on the indestructible nature of bitcoin. While giving an interview, McHenry straightforwardly explained that regulators can’t defeat an open distributed ledger. Distributed ledgers are decentralized so there is no single central authority controlling the ledger.
However, McHenry said that cryptocurrencies such as Libra, created to mimic bitcoin can be dealt with because of their centralized nature. Overall, he elaborated the inability to shut down bitcoin and control over Facebook’s stablecoin in simple words:
I think there’s no capacity to kill Bitcoin. Even the Chinese with their Firewall and their extreme intervention on their society cannot kill Bitcoin……My point here is, you can’t kill Bitcoin…..New iterations of this, that are trying to mimic it, they are not fully distributed, they are not fully open, there are different mechanisms to kill it.
Although the U.S officials are quite certain on the fact that bitcoin couldn’t be controlled or banned effectively, economist Saifedean Ammous believe that there are ways for killing bitcoin. While suggesting his thoughts at a podcast a few months ago, Ammous clearly stated that governments should compete with bitcoin in order to defeat it.
Saifedean Ammous authored the famous book “The Bitcoin Standard: The Decentralized Alternative to Central Banking”. He suggested that governments should try to handle the demand of bitcoin by offering an alternative. He even proposed governments to return to the gold standard and allow more privacy to individuals so that bitcoin is no more needed. Explaining tackling strategies for fighting bitcoin, Ammous urged:
The way for them to kill Bitcoin is for them to make the economic incentive to use Bitcoin irrelevant….They (Governments) need to offer a technology that is better than Bitcoin — that can obviate the need for Bitcoin.
Ammous’s advise centered not only on undermining bitcoin’s demand but also on not imposing bans or strict measures against the bitcoin. He believed that such measures could create an opposite effect and rather damaging bitcoin, would favor bitcoin. In this regard, he explained that any bank not allowing users to buy bitcoin would be advertising bitcoin in the first place. Therefore, he concluded:
And so, the more governments create restrictions like this, the more problems they create, [and] the worse their monetary policy is
Not long ago, the treasury secretary, Steven Mnuchin criticized bitcoin and told that bitcoin was up for some severe regulations. He outlined bitcoin’s extensive use in illicit activities such as money laundering to be very problematic for the U.S government. Comparing bitcoin with Swiss bank accounts, he said that both provided extreme privacy and freedom to their users.
Furthermore, the president of the United States, Donald Trump has also shown resilience and disapproval for bitcoin. It will be of interest to see how governments holding opposition for bitcoin handle the worlds largest truly decentralized cryptocurrency by market cap.