Leak reveals Democrats’ secret plan for a crackdown on game-changing US crypto that could hit the price of Bitcoin and Ethereum

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Update 05/14 below. This article was originally published on May 12

BitcoinBTC, Ethereum, and other major cryptocurrencies have been grappling with a US crypto crackdown this year that some say could “destroy bitcoin’s entire value.”

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Bitcoin’s price climbed in the early months of 2023 but remains far from its all-time highs of late 2021, with traders hailing a “new market regime”. The fate of Ethereum and other cryptocurrencies meanwhile hangs in the balance as US regulatory agencies fight for control of the market.

Now, a leaked memo distributed to members of the Democratic House Financial Services Committee has revealed the “key messages” lawmakers needed to stick to that could see almost any cryptocurrency classified as a security.

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MORE FROM FORBELon Musk Triggers Surprise 5,000% Bitcoin Rival Crypto Price SurgeBy Billy Bambrough Accused of Waging a Secret War on the Bitcoin and Crypto Industry Called a “Operation 2.0 Chokepoint” at the following the huge drop in bitcoin, ethereum and crypto prices.Getty Images

The document, sent to committee members by the Democratic Party ahead of Wednesday’s joint House hearing on crypto policy, was leaked by Fox Business reporter Eleanor Terrett on Twitter. “The problem is not the ambiguity of his massive disregard for existing laws,” the memo read. “We cannot invent new accommodating regulatory structures just because crypto companies refuse to follow clear rules of conduct.”

The memo calls on Democratic lawmakers to push back against Republican claims “they’re working to clear the markets by clearing space for the Commodity Futures Trading Commission (CFTC) in crypto”…”Republicans are proving they really are not”t serious about protecting investors and consumers. »

Bitcoin, ethereum and cryptocurrencies have become a partisan issue over the past year, with high-profile Republicans such as Ted Cruz throwing their support behind crypto while the influential former Democratic presidential candidate Elizabeth Warren embraced the idea that she was “building an anti-crypto army.”

Update 05/14: This week, a 2022 bipartisan bill was reintroduced in Congress by lawmakers that would hold U.S. federal agencies to account for El Salvador’s cybersecurity and financial stability capabilities as part of efforts to combat the use of cryptocurrency as legal tender, saying bitcoin could “weaken economic and financial stability and empower malicious actors.”

El Salvador became the first country in the world to make bitcoin legal tender in 2021, with the country’s president, Nayib Bukele, purchasing nearly 2,400 bitcoins as part of a plan to make bitcoin a central part of the economy. economy of the country.

“Given the United States’ interest in prosperity and transparency in Central America, we must seek greater clarity on how the adoption of bitcoin as legal tender may impact financial and economic stability. El Salvador, as well as El Salvador’s ability to effectively combat money laundering and illicit finance,” Jim Risch, an Idaho Republican who announced the legislation, told the Washington Examiner.

“Never in my wildest dreams did I think the US government would be afraid of what we are doing here,” Bukele posted on Twitter last year when the bill was first introduced.

US President Joe Biden issued an executive order last year directing federal agencies to investigate how to respond to the bitcoin, ethereum and crypto boom.

Under Chairman Gary Gensler, the United States Securities and Exchange Commission (SEC) claimed authority over the crypto market and suggested considering all cryptocurrencies other than bitcoin as unregistered securities.

“The SEC and the CFTC both agree that the SEC is the regulator responsible for determining whether crypto assets are securities, and the SEC has made it clear that almost all crypto assets are securities. ‘, the memo reads, adding, ‘End of story.

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MORE FROM FORBESHaving opened the “flood gates”?

Gensler, who has drawn criticism from the crypto community for his “regulation by enforcement” approach, has repeatedly asked Congress for more resources to better control the crypto market.

“Republicans want to reverse course and tie the hands of the SEC,” according to the memo. “The SEC must continue to lead the regulation of the U.S. crypto market, and Congress must do its part to provide them with the resources they need.”

The bitcoin, ethereum, and crypto industry widely criticized the memo.

“Weird that they put something so blatantly illegal in writing,” Ari Paul, chief investment officer of BlockTower Capital, said on Twitter. “The SEC does not have the authority to determine what is or is not a security under the law. To them, that would be a violation of the laws governing their operation.”

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I am a journalist with significant experience covering technology, finance, economics and business worldwide. As founding editor of Verdict.co.uk, I reported on how technology is changing business, political trends and the latest cultures and lifestyles. I have covered the rise of bitcoin and cryptocurrency since 2012 and traced its emergence as a niche technology in the greatest threat to the established financial system the world has ever seen and new technology the more important since the Internet itself. I’ve worked and written for CityAM, the Financial Times, and the New Statesman, among others. Follow me on Twitter @billybambrough or email me at billyATbillybambrough.com. Disclosure: I occasionally hold a small amount of bitcoin and other cryptocurrencies.

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