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Anti-Bitcoin Congressman: Libra Could be as Damaging as 9/11

Bitcoin Skeptic Bashes Libra

On Wednesday, Libra was the primary topic of discussion for the House Committee on Financial Services. Unsurprisingly, there was a multitude of U.S. politicians that expressed disdain towards the corporate cryptocurrency project. One specific comment stood out though, for both the Bitcoin community and those watching eagerly from the sidelines.

A few hours into the six-hour plus hearing, Brad Sherman, a Democratic Representative from the overall pro-innovation California, took the stage. In an unprecedented turn of events, Sherman claimed that while Facebook is truly innovating with its Libra blockchain, innovation as a concept and trend isn’t good per se. (What?)

The Californian representative noted that the “most innovative thing that happened this century” was when Osama Bin Laden masterminded the horrid 9/11 attacks on American soil, crashing a multitude of planes into key landmarks and places of business. What followed this attack was a war on terror, during which the U.S. was mandated to step up in terms of its technology and weaponry. In that sense, the 9/11 attacks were “innovative”.

Nuances of this analogy aside, Sherman went on to quip that Libra “may do more to endanger America than even [9/11].” Shocker, right?

He backs this statement by noting that cryptocurrencies are a fan favorite of terrorists, so to speak, presumably thinking of the reports on the purported use of Bitcoin by the Islamic State. What he is suggesting that if there is another terrorist attack on American soil, it may just be funded by digital assets, which in his mind includes Libra despite its differences from the decentralized cryptocurrencies that readers of this publication know and love.

Even if crypto-related terrorism isn’t a threat, Sherman goes on to note that Libra, which he hilariously dubbed “Zuck Bucks” for some inexplicable reason, is likely to see use by “drug dealers, tax evaders, and sanctions evaders.”

The Californian Representative then went on a tirade about how David Marcus, the head of Blockchain at Facebook, was the only one in the hot seat, remarking that “Zuck” should be grilled. Sherman roared:

“But someone with an understanding of the politics of this country needs to explain to Mr. Zuckerberg that if cryptocurrency is used to finance the next horrific terrorist attack against Americans, a hundred lawyers standing in a row, charging $2,000 an hour are not gonna protect his rear end from the wrath of the American people.”

He joins Mark Cuban, the “Shark Tank” star; Donald Trump, the president of the United States; and Federal Reserve chairman Jerome Powell as prominent skeptics of the Silicon Valley-backed coin.

Not All Doom and Gloom

It is important to note that Wednesday’s impassioned hearing wasn’t all doom and gloom for Libra, and thus the rest of the cryptocurrency ecosystem.

One notable highlight was when Meltem Demirors of Coinshares broke down Bitcoin for the Congress committee, specifically touching on how it is different than Libra and how it actually operates. She received some tacit support from two or three Congressmen, one of which somewhat lauded Bitcoin as an “unstoppable force” in an earlier CNBC interview.

Photo by Vadim Sherbakov on Unsplash

The post Anti-Bitcoin Congressman: Libra Could be as Damaging as 9/11 appeared first on Ethereum World News.

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Don't Let the Crypto Circus in Congress Fool You

Michael J. Casey is the chairman of CoinDesk’s advisory board and a senior advisor for blockchain research at MIT’s Digital Currency Initiative.

The following article originally appeared in CoinDesk Weekly, a custom-curated newsletter delivered every Sunday exclusively to our subscribers.


Judging from the most eye-catching headlines from two separate hearings on Capitol Hill Wednesday, it’s tempting to conclude there has been little of it from U.S. regulators and legislators in their comprehension of cryptocurrencies these past five years.

In fact, Rep. Brad Sherman’s laughable suggestion during a House Financial Services Committee hearing in the house that the U.S. ban mining and purchases of bitcoin could suggest we’ve gone backward since bitcoin was first discussed in Congress in the fall of 2013.

At that time, the sight of Jennifer Shasky Calvery, then-director of the Financial Crimes Enforcement Network (FinCEN), telling bitcoin exchanges and wallets they needed to register with FinCEN, was ultimately viewed positively by crypto enthusiasts. In showing that regulators like her weren’t inherently hostile to cryptocurrencies, Calvery’s comments led to a doubling in bitcoin’s price over the following two weeks to more than $1,100 in early December.

Now, five years on, some officials do sound a bit hostile.

At the same hearing that Sherman attended, Federal Reserve Chairman Jerome Powell said cryptocurrencies are “great if you’re trying to hide or launder money.” Had he noticed how the FBI had traced the bitcoin transactions of the 12 Russians indicted last week for trying to tamper with U.S. elections?

The folly of his position was indirectly identified over at the other hearing, where Chairman of the House Agriculture Committee Michael Conaway — who presumably did not intend to take a dig at the Fed Chairman — joked, “As long as the stupid criminals keep using bitcoin, it’ll be great.”

It’s best to look beyond the eye-catching headlines, however. In the wider context, it’s clear that we have actually come some way forward in regulatory comprehension of this technology. And that’s a good thing.

The sheer frequency with which governments, both here and in the rest of the world, are engaging on the topic is itself acknowledgment that it’s an important development that’s here to stay. It’s hard to keep track of how many hearings, symposiums, workshops and conferences are either sponsored by governments or attended by their officials. Consider also how dozens of law firms, a community that’s constantly interacting with both regulators and legislators, either have crypto practices or are doing research and education into how the law should deal with this issue.

The folks at Coin Center and others in the crypto space who’ve been engaging with regulators since 2013 remark that non-political staff members from the Securities and Exchange Commission, the Commodity Futures Exchange Commission and various other agencies are now much more comfortable using the language of this industry than back then.

This is the gradual way that change occurs within the creaking bureaucracy of Washington.

The influence of a parallel market

Part of this shifting tide reflects the unavoidable reality of crypto markets, which have grown massively since 2013.

Skeptics who cite a lack of clear real-world applications for cryptocurrencies and blockchain technology fail to see that the trading in bitcoin and tokens they dismiss as hollow speculation represents such an application. It marks a major shift in how money is gathered, exchanged and allocated.

Notwithstanding problems of measurement, the almost $300 billion that CoinMarketCap says is the crypto market’s total market capitalization is a historically significant figure. Even after its correction from a high above $800 billion in early January, the number belies the presence of an emerging, parallel capital market.

Much of that market will get shaken out and hundreds of coins will die, but others will emerge and, amid a mix of earnest offerings, scams, game-changing business models, big dreams and total flops, a unique new, gatekeeper-less market for ideas will arise.

It’s much like the Wild West, perhaps, but the Wild West gave rise to the vibrant, innovative economy of Northern California. Is something similar happening here in a more geography-agnostic way?

And, over time, there has been real human growth, too. Worldwide usage and trading, despite the market correction since January, remain many times larger than they were in 2013. Coinbase and alone are now running more than 20 million wallets each. There are more than 200 crypto exchanges, where more than $16 billion is changing hands daily in dozens of countries. The dollar amounts are still small compared with the trillions traded in traditional fiat capital markets, but they are by no means insignificant.

These numbers mean that governments are compelled to pay attention to this sector. Powell might be currently saying that crypto markets are too small to threaten financial stability, and therefore for the Fed to regulate them, but he will keep being pestered by lawmakers and their staff, as well as those of other government agencies, for his opinion on them.

Why? Because too many people and too much money is engaged in this industry for anyone in politics and policymaking to ignore.

International competition

Adding to this is the matter of global competition.

Various jurisdictions are taking stances that proactively encourage crypto and blockchain development, in part because they’re eager to attract some of that capital flow and in part because they want to promote innovation.

Singapore, Switzerland, Malta and Bermuda are all emerging as important new domiciles for ICOs. In recognizing concepts such as utility tokens, they are leading what I described two weeks ago as a global policymaker awakening to the innovative possibilities for new forms of economic design and value exchange.

Meanwhile, Japan has encouraged cryptocurrency transactions with some clear and fair regulations around them. And South Korea has just offered new tax perks to blockchain startups.

This is the backdrop to Wednesday’s testimony from former CFTC chairman Gary Gensler – now a lecturer at MIT’s Sloan School of Management and, with me, an advisor to the Digital Currency Initiative at MIT Media Lab – in which he urged legislators to enact clear rules for ICOs and cypto-tokens to instill confidence in the sector and avoid an innovation exodus.

When a respected former regulator says an industry like this matters, it resonates with the Washington crowd.

Yes, it’s baffling that Rep. Sherman and his ilk can still, after all this time, believe it would be a good idea to ban bitcoin, a decentralized, authority-less system for communicating information. Perhaps he was doing the bidding of his campaign donors, the top three of which in 2018 are from traditional finance and payments companies.

In any case, he’s irrelevant to the evolution of this industry. In the end, people like him will be overwhelmed by the many more who get it.

Image via Shutterstock

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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Congressman's Call for Crypto Ban Sparks Social Uproar

In the span of a few hours, it became Crypto Twitter vs U.S. Representative Brad Sherman.

On Wednesday, Congress hosted a pair of back-to-back hearings on the topic of cryptocurrencies (read CoinDesk’s coverage here and here), which notably saw Rep. Sherman – no stranger to controversy among crypto circles – call for a blanket ban on “buying or mining cryptocurrencies.”

And while Sherman is just one lawmaker among more than 400, social media observers quickly turned their sights on the California Democrat. For example, Sherman was accused of bias because his largest donor this past election cycle is a credit card payments firm based in Los Angeles (where his district, California’s 30th Congressional, is based).

Sherman’s declaration – and indeed, the wider social conversation around the twin hearings – led to a boost for the #CryptoCongress hashtag. According to data from Twitter analytics site Keyhole, the hashtag had a reach of over 1 million accounts and more than 2.7 million impressions from the start of the hearings yesterday to today.

As for Sherman himself, whether the member of Congress has any remarks on the hubbub remains to be seen – as of press time, Sherman’s office hadn’t responded to a request for comment.

From the moment that Sherman issued his remarks, the response was, to put it bluntly, unsparing:

And as might be expected, the oft-used criticism that the U.S. government is endlessly printing dollars came to the fore (likely in light of Sherman’s partial focus on mining, a process by which units of cryptocurrency are created). 

Some of the harshest words came in the form of accusations of a conflict of interest, given the Allied Wallet connection.

A few of them even probed deeper into this matter, highlighting how Allied, back in 2010, forfeited $13.3 million to the U.S. government as part of a settlement over payments linked to illegal online gambling. 

But could the uproar lead to actual political repercussions for the California Democrat? In the wake of the hearing, the hashtag #UnseatSherman2018 began to appear, and several observers claiming to be from the Golden State said that they wouldn’t vote for him in the next election.

What’s resoundingly clear is that the crypto social sphere – often a scene of acrimony and sniping over a variety of subjects – largely came together in light of Sherman’s remarks. As the saying goes,  “having an enemy is a great way to unite a community.”

Image via C-SPAN

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.