U.S. Congress Crackdown on Digital Currencies? FUD or For Real?
The Senate Judiciary Committee of the U.S. Congress just held a hearing on the “Combating Money Laundering, Terrorist Financing, and Counterfeiting Act of 2017.” As “digital currencies” are mentioned in the bill, some Bitcoiners are freaking out. Should they be?
An acute bout of FUD — fear, uncertainty, and disbelief — has hit the American crypto community as rumors swirl in the wake of the Senate Judiciary Committee’s November 28th hearing on a proposed anti-money laundering bill.
The keyword here is proposed. At any time, senators can work together to co-sponsor and propose legislation. Many proposed bills never pass into law in the U.S. Congress. More on that later though.
For now, the cause of users’ concerns lies in the 13th section of S.1241, as the anti-money laundering (AML) bill in question is administratively known as. This section proposes to add the word “digital currencies” to the already-standing title 31 of the United States Code pertaining to money laundering guidelines.
In essence, then, if this section were to pass — which it’s nowhere close to doing at present — then it would give U.S. regulators an official purview, or permission, to scrutinize ways to mitigate criminal money laundering through digital currencies like bitcoin and ether.
So just how concerned should the crypto community be?
Much Ado About Nothing at the Moment
Let’s be clear: the S.1241 bill is truly embryonic as it stands. It is nowhere near being passed, as it’s simply been introduced and now a hearing has been held on it.
Senate committees routinely hold hearings on all kinds of proposed bills. As noted earlier, many of these proposed bills never pass. And the bills that do pass typically undergo extensive revisions — so even if S.1241 were to pass, there’s no guarantee that its “infamous” Section 13 would still be standing.
Consider the image below. Note how S.1241 has only been introduced for now. The bill would still have to: 1) pass through the Senate; 2) pass through the House of Representatives; and 3) be signed by U.S. President Donald Trump before it would formally become law.
Considering the current status of the American political arena right now, it seems particularly unlikely that any rendition of S.1241 could pass any time soon. The ongoing 115th U.S. Congress has been in an unprecedented stalemate, having failed to pass consequential legislation yet due to in-fighting in the Republican Party and policy resistance from Democrats.
For example, the 115th U.S. Congress has already failed to pass all three renditions of the so-called “Trumpcare” bill — what was hitherto a major legislative goal for the Republicans, who currently hold the White House and majorities in the Senate and the House.
Accordingly, if the powers-that-be can’t seem to pass much of anything — even high-priority bills — then S.1241 doesn’t have a chance of passing in the short- or mid-term.
It’s a matter of political priorities, too. With the 2018 midterm elections coming up, Republicans have prioritized passing a last-ditch tax cut bill to optimize their electoral prospects. That means all other bills — including S.1241 — just simply aren’t major priorities right now.
Alas, if S.1241 were to gain traction, we’d all see it coming long before it arrived. The legislative process is long, topsy-turvy, and bitter in America as of late. Users would have plenty of time to prepare their crypto portfolios accordingly before S.1241 could ever materialize.
Concern would be more reasonable if S.1241 passed through the Senate, for example. Then the FUDsters would be more on target. For now, though, there’s no conceivable or even realistic timeline for that happening.
And another wildcard? President Trump. It’s not immediately clear whether he would be agreeable to signing S.1241 in the first place.
Coinbase Board of Director Served as Witness During Congress Hearing
One of the reasons why this new S.1241 bill isn’t as scary as many are making it out to be is that “digital currencies” were barely even touched upon during the Senate Judiciary Committee’s hearing.
Notably, Kathryn Haun Rodriguez was a witness during the hearing — a former Department of Justice attorney, a Stanford University lecturer, and member of Coinbase Global, Inc.’s Board of Directors. And Rodriguez only mentioned the word “cryptocurrency” one time during her official testimony.
That mention was to describe her career history:
“I teach a course on financial technologies and cryptocurrency at Stanford University, and recently joined the Board of Directors of Coinbase Global, Inc., where I chair its Audit and Risk Committee.”
So why was Rodriguez at the hearing? Curiously enough, to explain how the United States could bolster its AML provisions for U.S. dollars, not cryptocurrencies, by fostering “the ability of U.S. law enforcement to obtain foreign bank records.”
Indeed, the main theme of S.1241 had nothing to do with cryptocurrencies. Rather, this bill is generally aimed at preventing Americans from obscuring bank account ownership.