What Will Happen to Cryptocurrency in the U.S.?
And Why This Could Affect You
Even if you’re not familiar with cryptocurrency, you’ll notice one thing about its market trends — it has been trending higher and higher in the past decade. Then suddenly, in mid-April this year, Bitcoin and other cryptocurrencies plunged significantly in value. That’s because the U.S. government has started the conversation it’s been putting off for some time: Should cryptocurrencies be regulated and, if so, how? Here are some reasons the discussion needs to move forward. Criminal Usage of Cryptocurrencies Is cryptocurrency still popular with criminals? A blockchain data firm Chainalysis reports that illicit activity made up 0.34% of all cryptocurrency transaction volume. That’s roughly 2% lower than in 2019. While the percentage has dropped for overall activity, Kim Grauer, head of research at Chainalysis, told NBC, “Still, ransomware was by far the biggest category in terms of activity growth (311% year over year), and we’re seeing an all-time high for dark-net market activity.” Ransomware is malicious software that hackers use to infect a computer, then demand a fee to unlock it. The bounty is typically paid in Bitcoin or other cryptocurrencies, which are difficult to trace. A while back, I got a call from a good friend. “Hey,” he asked, “what are you doing Friday night?” I told him I was traveling visiting clients until Thursday, but that I’d be free by Friday. “Great,” he said. “How would you like to go with me to Palm Beach, Florida, and attend a get-together at Mar-a-Lago?” Palm Beach is only a little over two hours from where I live in Florida, and Mar-a-Lago is one of the most private clubs in the United States. You might know it as the home of former president Donald Trump. I asked my friend if I could think about his offer. Then I did for about three minutes before saying yes. Not only would I get to see inside this exclusive private club, but I may also get to meet Donald Trump and exchange business stories. Upon arriving at Mar-a-Lago that following Friday, we were pleasantly greeted by a very well-armed Secret Service person. After he vetted us and took our vehicle, he directed us inside through the main dining room to the room where the get-together would happen. It overlooked a manicured lawn and had a beautiful view of the Atlantic. “Where is Donald Trump?” I asked our escort as soon as I could. “I mean, the guy lives here, so where is he?” The escort directed me to look through the window next to me. His apartment was visible through that window, about 15 feet from where I was standing. So, being as inquisitive as I am, I walked around that area, trying to get a glimpse of “The Donald.”
Regulatory Uncertainty in the U.S. Although criminal usage of cryptocurrency is rather miniscule today, how do you resolve issues with ransomware? One rule proposed by the U.S. government would require anyone holding crypto in a private digital wallet to undergo identity checks if they make a transaction of $3,000 or more. Many believe, however, that this isn’t a long-term solution. Jesse Powell, the CEO of Kraken, the world’s fourth-largest digital currency exchange, told CNBC that the U.S. is more “shortsighted” than other nations and “susceptible” to the pressures of incumbent legacy businesses, like banks, that “stand to lose from crypto becoming a big deal.” Technically, the Securities and Exchange Commission (SEC) regulates most crypto, but even Hester Pierce, a commissioner of the SEC, says, “We’ve seen other countries take a more productive approach to regulating crypto. Our approach has been to say no and tell people [to] wait … we need to build a framework that is appropriate for this industry.” In some ways, crypto is profitable like the stock market is, except you can also use it to purchase goods and services. While this regulatory framework isn’t clear just yet, the longer it takes to establish, the more the American public, like you, might lose out on these multibillion-dollar markets.
Unfortunately, whether because he was watching TV or off on some political or business venture, I couldn’t find him. I did have a great time looking for him and getting to see how the top 0.5% live as we dined in the Mar-a-Lago Club. To give you an idea as to what it looks like, here is a photo of me from right after I finished my search for Donald Trump. In Search of Donald Trump
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