Money reimagined: a turning point for crypto | Michael casey

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When the Conversation section of last Friday’s newsletter covered the swirling congressional debate over the crypto provision in the U.S. Senate Infrastructure Bill, it was already a big story. But what happened over the next three days took it to a new level. Officially, the debate ended in a loss for the crypto community, but as this week’s column points out, it actually played out as a positive turning point in the public profile of tech.

As the column points out, the legislative battle captured a struggle between the new and the old. It’s also the central theme of this week’s podcast episode, which in the news marks the 50th anniversary of one of the most important and underrated events of the second half of the 20th century: The Suppression the peg of the dollar to gold on August 15. 1971. With Cornell Economics Professor Eswar Prasad and CoinDesk Podcast Editor Adam B. Levine as guests, Sheila Warren and I delve deeper into the legacy of this event and how it frames the upcoming digital currency wars.

Listen after reading the column.

Congress gives crypto a gift: moral height

Occasionally, a loss can be seen as a victory.

This is how I feel about the stupendous crypto communities but ultimately failed to get the Senate to amend a very damaging cryptocurrency watch provision in its infrastructure spending bill.

The episode, with a plot designed for Hollywood in which thousands of highly motivated activists were ultimately blocked by a single interested senator, made it easier to tell the crypto story of inexorable change. Industry is now armed with the same basic narrative that revolutionaries and activists have carried throughout history, that of a persistent struggle that will ultimately be victorious when the old inevitably gives way to the new.

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As my colleague Emily Parker noted this week, the crypto community needs to improve to tell its story. Even though Bitcoin advocates continue to tout the benefits of a decentralized peer-to-peer exchange and a proven scarce digital store of value, the idea has generally failed to resonate with enough. broadband of the general public. While attitudes are clearly changing as the adoption of crypto expands, this lack of understanding among the general public allows figures like Senator Elizabeth Warren (D-Mass) to speak out against the dangers of crypto.

But last week seems to be a turning point.

It all started when Sen. Rob Portman (R-Ohio) inserted a provision into the infrastructure spending bill that would increase the tax reporting requirements of cryptocurrency exchanges and capture an estimated $ 28 billion in news. tax revenue (as a contribution to $ 1 trillion bills – plus price tag).

The biggest problem with the layout was the general, catch-all language of what constitutes a broker, which crypto industry lawyers say would be subject to broad interpretation, potentially capturing miners and open developers. source required to report to the Internal Revenue Service. . As we argued in an editorial on Monday, the provision as drafted raised the specter of draconian surveillance of people’s day-to-day transactions, would drive crypto innovation overseas, and was most likely unenforceable.

Grassroots action

Almost immediately, crypto advocacy groups including Coin Center, the Blockchain Alliance, the Digital Chamber of Commerce, and the Association for Digital Asset Markets (ADAM) sprang into action. They were successful in convincing Senators Ron Wyden (D-Ore), Cynthia Lummis (R-Wyo.) And Pat Toomey (R-Penn.) To sponsor an amendment that would reduce reporting liability to exchanges providing child care to their customers and exempt minors and developers from its requirements. The bipartite nature of this sponsorship was essential.

With the help of a savvy Fight for the Future social media campaign, these groups have succeeded in motivating thousands of crypto enthusiasts to call, email and tweet their Senators, urging them to embrace the ‘Wyden-Lummis-Toomey amendment. This mass action has made it clear that while the lobby groups themselves are funded by crypto companies, their real power comes from crypto investors and other people engaged in the industry who are highly motivated to participate in crypto companies. local campaigns. It made him feel like a popular message, not just a message from special interests.

The campaign had an immediate impact. Lawmakers from both houses of Congress and from all walks of life began to lobby for the amendment and criticize the original provision as a threat to U.S. innovation leadership and an invasion of privacy.

Even Portman himself acknowledged that the Senate should consider fine-tuning the wording of the provisions to remove its ambiguities.

His first formal attempt to correct it, a competing amendment co-sponsored with Senators Mark Warner (D-Va.) Attempted to distinguish between proof of work and proof of stake in a clumsy attempt to keep developers from the latter within the scope of the law.

But ultimately, the three made a deal with Wyden, Lummis and Toomey, drafting a new amendment on Monday that satisfied all six senators and that crypto advocacy groups such as Coin Center said they could support. Just getting there has been an impressive achievement for the crypto community.

Resistance

What happened next was almost comical.

Subject to a consent vote requiring 100% approval, the new amendment won the support of 99 of 100 senators. The refractor was Richard Selby, a Republican representing Alabama. He refused to sign unless an additional $ 50 billion defense contract provision was added to the bill. This was rejected by Sen. Bernie Sanders (I-Vt.), And therefore the do-or-die amendment vote failed, meaning the original cryptographic provision of the bill remained intact, despite the recognition universal of its problematic formulation. (Shelby even admitted it was flawed.)

Many in the crypto community have speculated that Shelby was more motivated by protecting the interests of his Wall Street donors than by the defense industry. After 35 years in the Senate, he is due to retire in 2022, fueling a conspiracy theory that by doing the bankers’ anti-crypto auctions, he was clearing the way for his employees to get jobs on the streets when he left. .

Whether or not this is true, the image of an elderly white man who has served in his post since the Cold War, vehemently refusing to support sensible legislation that fosters innovation and designed to maximize long-term tax revenues, all this because of its own narrow, special interests, is exactly what crypto needs.

Juxtaposed with the popular campaign of tens of thousands of crypto enthusiasts across the country, including many generations younger than Shelby, his stubborn resistance has become the perfect picture of the old guard resisting change to protect its own interests. . This directly relates to the very problem of centralized gatekeepers that Bitcoin and other blockchain technologies seek to bypass.

If crypto advocates need an image to illustrate this problem, what better than that of an elderly and disconnected senator, captured by business interests, blocking the wishes of all other senators. In this case, it is literally the 1%.

Now, as the fight for the bill goes to the House of Representatives, the community is rightly invigorated. Of course, there will be a lot of resistance from other interested members of Congress, which means that this stupidly worded crypto provision could still become law.

But even if that happens, the moral victory is won. The once marginal crypto community finds itself legitimized, which will ultimately result in a constructive policy environment for the industry.

The plot has changed, with a conclusion that promises to be far more favorable to the industry than the one its opponents wanted to write.

Off the charts: Penguins and punks

Were in the midst of a mania, a mania for chubby penguins, crypto punk, and bored monkeys. I am of course talking about non-fungible tokens.

The trading volumes in the NFT OpenSea market are the best way to represent this mania. Check out this chart that CoinDesks Shuai Hao created from data provided by Dune Analytics.

(Shuai Hao / CoinDesk)

Source: Dune Analytics

The surge in August volumes on OpenSea shows that the NFT craze is still on its way. When NFT prices peaked earlier this year, only to drop rapidly, many observers said the market was grossly inflated, but these numbers suggest otherwise. What matters now are less the prices than the volumes.

That’s not to say the prices aren’t too high. Were not talking about numbers like $ 69.3 million that Beeples The First 5,000 Days collected in March. But the 400 ethers ($ 1.3 million) someone paid for this image from the Bored Ape Yacht Club series is hardly a stupid change.

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