Analysis

Cryptocurrency Adoption Increases despite Uncertainty in the US

The total market cap of digital currencies increased by nearly $700 billion in the last three weeks.

For the last few weeks, the hottest topic of discussion in the US has been the cryptocurrency amendments in the multi-billion dollar infrastructure bill. Earlier this week, Cynthia Lummis, the US Senator from Wyoming, expressed her optimism regarding the upcoming crypto rules and mentioned that the crypto community in the US would be pleased with the outcome.

However, key stakeholders remained uncertain because of the proposed cryptocurrency taxation rules in the US. In a recent tweet, Elon Musk, CEO of Tesla, said that it is not the right time to pick winners or losers in the cryptocurrency ecosystem.

Despite the uncertainty, the latest data shows that the adoption of cryptocurrencies has increased rapidly in the last few months. Global users are not really worried about the US regulations as the total number of international cryptocurrency user base increased from 100 million in January 2021 to over 220 million in June 2021.

Finance Magnates asked leading voices in the cryptocurrency market about their views on the latest developments.

“If the final senate amendment gets incorporated into the bill, the impact of this new legislation will be marginal for non-US entities. Centralized businesses like exchanges and custodial wallets should be able to provide the necessary tax reporting required by the bill,” William Quigley, Co-Founder of WAX, commented.

“Alternatively, these foreign businesses can ban US citizens from using their platforms. That would be unfortunate for American customers, but we’ve already seen this happen already with foreign exchanges. This would just be a continuation of the trend of Americans being denied access to the best global platforms,” Quigley added.

Awareness of Cryptocurrency Assets

Jason Deane, Market Analyst at Quantum Economics, termed the latest media coverage of crypto amendments in the US infrastructure bill as a great tool for ‘cryptocurrency awareness’ across the US.

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“It is a sign of the times that a few paragraphs in a multi-billion dollar infrastructure bill concerning cryptocurrencies have been instrumental in delaying the approval of that bill. The media coverage has been significant, raising awareness of Bitcoin (and other currencies) across the U.S., no doubt bringing new users into the space as a result. It is also worth noting the power of the extended community who came together to log their concerns with that wording via their respective house representatives, mobilizing quickly and efficiently through social media platforms,” Deane said.

“It should also be remembered that Bitcoin is truly global and the U.S. represents a mere fraction of planet-wide activity. Legislators must remember, therefore, that a badly calculated move here will succeed only in removing the country from the innovation and economic activity that will inevitably carry on regardless. It is essential that time is taken to ensure the best balance between taxation, reporting and allowing that innovation to continue within the borders for the long-term economic benefit of the country,” he added.

Lack of Crypto Knowledge

Maria Stankevich, Chief Business Development Officer at EXMO UK, believes that one of the biggest obstacles in the adoption of cryptocurrencies is that the people who have the ability to accept and introduce the laws have no knowledge of crypto.

“In my opinion, the new bill will cause billions of dollars of damage to the growing crypto industry and will force it to leave the country and go abroad. I believe that the common problem (and we see it not only in the US but in Europe also) is that people who have the influence and ability to accept and introduce the laws have no knowledge of crypto. For example, let’s take the case with the definition of ‘broker’, which includes non-custodian industry participants and contains additional reporting requirements for digital assets. They should narrow down the definition of ‘broker’ in the context of the crypto industry to platforms that exchange digital assets for fiat,” she said.

“If not – I can assure you that most of the actors in the industry will not be able to fulfill their obligations, and the consequences for the US crypto industry (and not only the US) will be devastating. The implications are clear: it is an impossible task to impose reporting rules on Americans who develop software and hardware, mine, secure the network, or launch nodes to improve its resilience and efficiency. And, it would be foolish to deny that the United States is a beacon for other governments, and such measures will harm the exchange rate by 100%,” Stankevich added.

Regulatory Framework

Marc P. Bernegger, a Member of the Advisory Board of GenTwo, mentioned that a clear cryptocurrency regulatory framework is needed to accelerate the adoption of digital currencies.

“In my view, it is a great development that crypto reached the top decision-makers in the US. Crypto has become too relevant to be ignored by US policymakers. Who would have ever thought a few years ago that the US Senate will have in-depth discussions about the classification of the crypto industry? The fact that the US is setting up a clear framework for crypto is an additional endorsement of the whole industry. These very recent developments in the US Senate are boosting the market size and price of Bitcoin and other digital currencies. A clearer regulatory framework will bring even more traditional investors into the crypto market,” Bernegger commented.

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