The US vs. China: Foes in the Trade War But Allies in Crypto Crackdown

They may be in a ‘Trade War,’ but the US seems to share the same perception of cryptocurrencies with China. Several bodies under the Biden administration plan on implementing guidelines that could have a direct impact on cryptocurrencies.

The Securities and Exchange Commission, the Treasury Department, and the Federal Reserve have proposed policies that could potentially drive out crypto operations in the US. The situation is almost similar to the occurrences that took place during China’s recent crypto crackdown.

Federal Government Regulations on Crypto

The US government is making moves on the digital asset market to impose overburdensome regulations. According to them, this is the right way to protect investors. On August 3, 2021, the SEC considered asking crypto mining companies to formulate a climate report detailing their greenhouse gas emissions. 

While it is true that crypto mining emissions affect the environment, requesting companies to record such complex documents may automatically cripple mining operations in the US. Other reports suggest the US Treasury Secretary Janet Yellen campaigned against a crypto legislation proposal made by Sen. Ron Wyden. 

According to the proposal, which was part of the bipartisan bill, Sen. Ron and other senators presented their amendment on August 4, 2021. The proposal sought to exempt node operators, miners, and developers from crypto tax reporting. 

Nonetheless, the Treasury explained that it required a comprehensive definition of a broker in the bill to implement flexible tax compliance. In the end, this action could call the IRS to ensure everyone, including those without the correct information, report their tax data.

Who Will Regulate Crypto?

The struggles in the Biden administration continue to reflect as several agencies decide on who should oversee the regulation process of digital currencies. On one side, Sen. Elizabeth Warren is secretly said to be supporting the actions of SEC’s chair Gary Gensler to become the regulator of cryptocurrencies. 

Warren, who holds a high ranking position at the Senate banking committee, previously suggested a crypto crackdown on digital currencies, terming them as the wild west of the financial system. Interestingly, the SEC’s chair is determined to support the Senator’s idea of scrutinizing the digital asset market. The Consumer Financial Protection Bureau is the other body contemplating whether it should impose crypto regulations. Despite not revealing any regulatory intention, the CFPB is taking significant measures to deal with issues on crypto fraud. 

The CFPB confirms it receives numerous consumer complaints regarding fraudulent crypto businesses. In one way or another, these complaints could push the CFPB body to join the regulatory arena. 

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While it is good to safeguard citizens, including more provisions can inhibit the growth of cryptocurrencies and destroy the whole concept of financial freedom.

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