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Day: November 5, 2021

A Crypto Surveillance Mandate In the Infrastructure Bill Must Be Rejected

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A Crypto Surveillance Mandate In the Infrastructure Bill Must Be Rejected

Washington, D.C. — Today, the US House is expected to take a vote on the bipartisan infrastructure bill that contains vast implications for cryptocurrency users.

Hidden inside is an amendment to tax code 6050I that could make receiving and failing to correctly report a digital asset (be it a cryptocurrency, NFT, or another type of digital asset) a felony. According to the amendment of 6050I, any US citizen who receives over $10,000 must report within 15 days the sender’s personal information such as Social Security number and tax ID. Failure to do so could result in mandatory fines and lead to a felony charge with up to five years in prison. 

As noted by University of Virginia School of Law Adjunct Professor Abraham Sutherland, it “relies on a 1984 law that was written to discourage in-person cash transfers and to encourage the use of financial institutions for large transactions”. By regulators once again applying old rules to an emerging asset class they are risking not only harming the consumer and the whole nascent industry but also further eroding the privacy of US citizens. 

“If passed, this amendment will stifle innovation and result in huge loss of value for consumers and businesses alike while further centralizing control over transactions that US citizens make. It will hurt a flourishing economy, and it will also have long-term effects in a future where digital assets are not going away,” said Yaël Ossowski, deputy director of the Consumer Choice Center, a global consumer advocacy group.

CCC’s Crypto Fellow Aleksandar Kokotović echoed those sentiments: “Not only US companies and investors would be hurt by this amendment, but also domestic consumers and retail investors, who would be severely discouraged from participating in the digital asset class economy which is now setting standards for decades to come.”

In an asset class that didn’t exist in 1984 when the original law was written, it is completely possible that the person receiving the funds would not have a specific individual or legal entity to report but rather that the ‘sender’ is a decentralized exchange or a group of individuals. This is just one example of the anachronistic stipulations of this amendment that are worrying consumers.

“Turning even small retail investors such as students into potential felons or subjecting them to outdated laws will only serve to limit the unparalleled economic growth currently provided by the sector, or risk pushing all investment and entrepreneurship to other jurisdictions,” added Kokotović.

As legislators and regulators seek to understand, contain, and regulate cryptocurrencies, last week the Consumer Choice Center published its list of common-sense principles for smart crypto regulation that will safeguard innovation, protect consumers, and adapt for technological and financial change.

“We recognize the importance of crypto regulation for keeping bad actors in check and providing a sound institutional framework. We also recognize that the nascent crypto finance space is ever-changing and rapidly evolving, and that overzealous regulation could cripple future potential,” said Ossowski. “We offer bedrock principles on smart crypto regulation for lawmakers, hoping to promote sound policies that will encourage innovation, increase economic inclusion across all income groups, all the while protecting consumers from harm,” he added.

In the coming weeks, the Consumer Choice Center will be meeting with legislative and regulatory officials to ensure these principles are upheld in any future regulation or guidance.
 

CONSUMER CHOICE CENTER’S PRINCIPLES FOR SMART CRYPTO REGULATION:

  • Prevent Fraud
  • Technological Neutrality
  • Reasonable Taxation
  • Legal Certainty & Transparency

The policy primer can be read in full here.
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The CCC represents consumers in over 100 countries across the globe. We closely monitor regulatory trends in Ottawa, Washington, Brussels, Geneva, and other hotspots of regulation and inform and activate consumers to fight for #ConsumerChoice. Learn more at consumerchoicecenter.org.

COP26: Lots of costly promise but no feasible solutions

This week, leaders from across the world are gathering in Glasgow to attend the Conference of the Parties, 26th United Nations Climate Change Conference, hosted by the UK in partnership with Italy. This is the biggest meeting on climate after Paris back in 2015, which resulted in participating countries signing an agreement aiming to keep global warming at below 2 degrees celsius. In Glasgow, countries will present their action plans for carbon reduction for 2030 and some developing countries will secure large sums of money to help them move away from fossil fuels. Hopes are big, promises even bigger, but are their methods of fighting climate change the right way to approach the problem?

The goal itself is commendable and important to achieve, but we should not sacrifice consumer choice and freedom to it. Every policy should be examined through the lens of consumer choice, and it should be at the centre of every climate strategy. 

Unfortunately, governments have opted for the combination of restrictions, taxes and bans to tackle climate change. This is quite a costly strategy, and consumers will have to carry the burden of it. For example, to cut carbon emissions, the EU is planning to ban motor vehicle sales from 2030. Motor vehicle drivers are already some of the most heavily taxed consumers. Fuel, ownership, registration and CO2 based taxes are just a few examples of what motorist vehicle drivers have to deal with and now the EU is taking on an even more radical approach. 

Arguably, one of the most disputed parts of the EU’s Green plan is the creation of a sustainable food system, with little to no reliance on pesticides and incentivising organic farming. Green activists demonise pesticides branding them as” dangerous”. According to the Food and Agriculture Organisation of the United Nations (FAO), without them, the farmers would lose 30 to 40 percent of their crops. Organic farming has low yields, whereas to feed the ever-growing population we need to increase our food production. However, in the case of organic farming, we would have to put more land for agricultural production, which can only be achieved through deforestation which naturally hurts the planet, and which is also what COP26 attendees commit to end. These climate strategies are inconsistent and chase their own tail.

Electricity and heat production account for around 25% of global greenhouse gas emissions. Policymakers are pushing for alternative renewable energy sources, like solar and wind powers, but continue to dismiss the many advantages of nuclear energy. Nuclear power has been pushed to the background because of its bad reputation and accidents such as the Chernobyl nuclear explosion (which was the result of poor management and not nuclear per se). Multiple studies have shown that risks associated with nuclear plants are low and keep declining.

Strategies that policymakers have elaborated entail many false assumptions. Instead of practicing losing combinations of restrictions, bans and taxes, embracing innovation in the above-mentioned sectors would be the right thing to do. Giving innovative technologies a chance is the only way to combat climate change and not leave consumers on the losing end.

In the next blog posts, we will dive into the agricultural, mobility and energy sectors and lay out the Consumer Choice Center’s recommendations on how innovation should drive us forward as we look for the best solution to the climate change dilemma.

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