Chairwoman Maxine Waters' Make or Break Week For Cryptocurrency in D.C.
Chairwoman of the United States’ House Financial Services Committee, Rep. Maxine Waters, will host a series of working group discussions this week with key corporate executives from the cryptocurrency banking world, including top execs from several US-regulated crypto companies.
Although ruthlessly villainized by much of the new right online — perhaps in large part because she’s a woman in power who called out former President Trump’s alleged financial irregularities and shady dealings years before most in D.C. were willing to, at the height of his popularity… and more broadly, she pierced Trump’s veil of legitimacy, so sure was the Chairwoman that Trump’s empty promises (and threats) were just that — hot rhetoric without follow-through.
In a time of prolonged crisis and unprecedented national emergency, America’s financial system has remained admirably intact — inflation concerns began in earnest only weeks or months ago, key federal wire and asset transfer services remained operating with little if any interruption, and the United States’ regulatory standing in the world has remained unrivaled throughout the pandemic.
In no uncertain terms, Chairwoman Waters is in large part responsible for that maintenance of confidence.
Crypto hotshots would be wise not to underestimate the Chairwoman’s office, her Committee’s legislative authority over key economic matters, or her understanding of how certain mechanisms — like stable coins — may compete with the U.S. dollar itself, and potentially undermine its use.
As the U.S. dollar is an open system — used by more than 14 countries aside from our own as currency, and still the largest currency for clearing inter-border transactions by far, with an average Fedwire transfer amount above $4.7 million per transaction as of most recently available data — Bitcoin and other “pure play” mineable crypto blockchains like Litecoin are no threat to the dollar, or its federal clearinghouse pipelines.
Like rare collectible art or an investor’s speculative tranche of gold, silver, or palladium — or a pack of sought after rare playing cards, Bitcoin and other mineable cryptos are just another item that the dollar is able to purchase for citizens and others who continue to invest faith in the U.S. financial system. (The recent rise of NFTs in popularity only underscores the notion that crypto may be something like a rare playing card, combined with some elements of a rare commodity like gold or palladium.)
And, for years, tax authorities in the U.S. have provided clear guidance on how to treat crypto profits.
Yet around stable coins, indeterminate crypto-denominated lending agreements, and the like — there is considerable murkiness. Real people have been harmed by not understanding the risks of stable coins, sort of how someone who buys a fake Rolex or Cartier is harmed by way of thinking they had bought something they hadn’t. With Bitcoin, there’s no illusion you’re buying the safety of the dollar — quite the opposite.
With some of these stable coins, there’s opportunity for abuse and poor marketing — both areas where legislators can draw a line in the sand now, rather than years later.
For all the hate the right has thrown on Chairwoman Waters, she’s shown herself to be a fearless sheriff of the financial services industry, one above partisan cable TV talking points. It’s our suspicion that her office will fall short of banning cryptocurrency in the United States outright, while encouraging strong action against some market participants acting in bad faith — especially some of the firms working with stable coins outside of the United States.
There’s an Arabic proverb that 1,000 years of tyranny is better than a single second of anarchy, and that’s a view that the Financial Services Committee may cleave to this week. Yet with that said, cryptocurrency is probably here to stay — just this past week financial services giant Fidelity furthered its plans to launch a Bitcoin spot ETF up in Canada, and tech luminary Jack Dorsey is rebranding his PayPal competitor Square to “Block,” in order to denote the company’s renewed focus on blockchain transactions, it is presumed.
—FULCRUM Research