If you’ve seen the returns in my cryptocurrency portfolio this year, you would be disregarding my predictions about the direction of the cryptocurrency market. I’ll thus stick to my strengths and offer some regulatory forecasts for the bitcoin sector.
Few legislative changes
Small victories will make it possible to pass “must have” legislation, such as B. Defense permits or general spending laws. A de minimis exemption would be the best option for minor cryptocurrency transactions to completely free users from capital gains tax obligations. With Bitcoins, you purchase coffee. The legislation proposed by Republican Rep. Tom Emmer might also provide safeguards for non-custodial cryptocurrency providers. A bipartisan stablecoin bill could be introduced internationally, but Senate Democrats still have a long path ahead.
But don’t expect big bills like Lummis-Gillibrand or Boozman-Stabenow to be passed during the next Congress. Cryptocurrency advocates in Washington have come a long way this year. No one could have predicted in 2018 or 2020 that two US Senators, Democratic Sen. Kirsten Gillibrand and Republican Sen. Cynthia Lummis, would appear at multiple crypto conferences in 2022 to promote a bill they wrote to address regulatory issues to create clarity.
While bills like Lummis-Gillibrand and Boozman-Stabenow are excellent conversation openers, reasonable expectations should be kept in mind given that the next Congress will pass neither. Think about how little comprehensive financial services legislation has recently been in the United States. Congress hasn’t passed any primary financial services legislation since the Dodd-Frank Act of 2010, incorporating ideas from Democratic lawmakers from the 1990s. Overton’s narrow window between Democratic Ohio Senator Sherrod Brown, flirting with a cryptocurrency ban, and new House Majority Leader Emmer, who advocates decentralized finance (DeFi) as a true cryptocurrency native.
The Securities and Exchange Commission may win some litigation
Although Ripple will ultimately prevail in its legal battle with the Securities and Exchange Commission, the likelihood of this happening in district court is minimal. The Howey test for investment contracts, which the SEC uses as precedent in its investigation of Ripple, is a flexible standard. Historically, the SEC has never brought cases under the Howey test against investment opportunities it intended to register, instead using them as a stick against actual fraud, so the SEC’s appellate judges have upheld if Ripple goes all out to the Supreme Court and if the judges in their case are just as eager to eliminate administrative discretion as they were in a recent defeat of the Environmental Protection Agency under the “key issues doctrine,” Ripple has a chance to win the game change. And ultimately win their epic battle against the SEC.
2023 is the year that crypto users wake up to the need for privacy
A Cambrian explosion of crypto privacy is on the horizon as government surveillance efforts gather momentum. Crypto privacy in the United States is under constant attack. Now, we still face massive privacy threats. For example, this year, the Treasury sanctioned the only working tool on Ethereum for complete privacy: Tornado Cash. CoinJoin and Samourai Wallet do an excellent job of masking transaction history for demand bitcoin.
BTCtickers is down $16,769 per user Leading privacy cryptocurrencies like Zcash Stickers fall $41 and Monero MXR. The $147 tickers currently offer different approaches to the tradeoff between privacy and convenience. (Zcash offers optimal privacy while protecting assets and transactions and is working on historical usability challenges, while Monero is more prone to statistical tracking but has achieved broader adoption.
Privacy is still regarded as a specialized concept in cryptography, however. Fortunately, millions of users of Bitcoin, Ethereum, and other chains are unaware of the possible monitoring of their transactions. Those who sold the top in 2021 but didn’t go through the arduous process of offsetting owed capital gains will soon find thousands of new US Internal Revenue Service officials skilled in using simple block explorers and more sophisticated Chainalysis tools.
Between the United States and European Union, both may lose
The European Union’s approach to launching new tokens seems more sensible than that of the United States, with a light disclosure approach based on white papers. However, its aggressive approach to monitoring private wallets threatens user privacy by forcing exchanges to in-person KYC. Purses. The US can compete with Europe in crypto development if they can better streamline the rules for centralized crypto entities while leaving true DeFi alone, which is viable and ignoring the voices of, like the Democratic Senator Elizabeth Warren, who would use KYC rules to destroy cryptocurrencies effectively. It’s still too early to predict where things will go, but it will be an exciting year for cryptocurrency regulation!