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Cryptocurrencies

Preserve privacy by rejecting a ban on Bitcoin and crypto self-custody in Lithuania

Lithuania’s Finance Ministry has announced plans that would essentially outlaw non-custodial crypto wallets – the practice of self-custodying of Bitcoin and cryptocurrencies on a wallet an individual controls – and impose stricter regulations on crypto exchanges in an attempt to combat money-laundering, terrorist financing, and sanctions evasion. 

The prepared draft law heads to the Seimas and, if passed, would impose stricter regulations on individuals as well as cryptocurrency exchanges in the country.

This bill mirrors a proposed European Commission regulation that has passed various EU Parliament committees but has yet to adopt continent-wide, aiming to restrict cryptocurrency services and institutions.

“Banning non-custodial wallets, together with introducing strict and complicated measures for cryptocurrency exchanges will introduce unfavorable conditions for the growing industry and will cause a number of businesses to be forced and move their operations abroad – not to mention the harm this does to consumers who want to safely and securely enjoy crypto services,” said Aleksandar Kokotovic, crypto fellow at the Consumer Choice Center, a consumer advocacy group. 

“A measure that aims to prevent money laundering will have very little effect in doing so but will definitely hurt the privacy of Lithuanian citizens and force them to use services based outside of the country, leaving them less secure than they are at the moment,” said Kokotovic.

“Non-custodial Bitcoin and cryptocurrency wallets are basically just code, many of which are open source and can be replicated and forked indefinitely. A government trying to ban code is not only ridiculous but will do absolutely nothing to supposedly stop bad actors. All it will do, in the end, is create a precedent for the government to crack down on its own citizens for using cryptocurrencies,” said Yaël Ossowski, deputy director of the Consumer Choice Center.

“Banning software in 2022 is not only a bad idea that will be impossible to enforce, but will have a wide array of possible negative consequences, including the privacy of financial and crypto customers. 

“We have seen consumers voting with their feet in the past and sometimes being forced to choose service providers in different countries to avoid similar measures. We are still hoping that Seimas will understand the worries around approving such legislation and that they will preserve privacy and safeguard innovation rather than create unfavorable conditions for consumers and businesses,” said Yaël Ossowski, deputy director of the Consumer Choice Center.

The Consumer Choice Center strongly urges Seimas members to vote against this legislation and to preserve the privacy of Lithuanian citizens as well as continue creating a prosperous and friendly business environment for consumers and industry alike.

“We offer the following 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,” said Ossowski.

PRINCIPLES

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

“The temptation to regulate cryptocurrencies and the blockchain economy based on financial considerations alone, rather than the innovative potential, is an active threat for entrepreneurs and consumers in the crypto space,” said Aleksandar Kokotović, CCC’s crypto fellow and co-author of the primer.

“Penalizing first-movers in crypto innovation 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 less reliable and lawful jurisdictions,” added Kokotović.

The policy primer can be read in full here

New York lawmakers just killed Bitcoin and crypto mining and consumers will suffer

Albany, NY – Early this morning, the New York State Senate joined with the State Assembly to pass a moratorium on Bitcoin and cryptocurrency mining, issuing yet another reminder that state lawmakers want to deny their residents from interacting with cryptocurrencies.

The law would prevent new permits from being issued to carbon-based fueled proof-of-work mining operations that use behind-the-meter energy, putting millions of dollars worth of investments into jeopardy. This follows the logic of the much-derided BitLicense regulation, which has made it nearly impossible for small and medium-sized firms to offer crypto services to New York residents.

“By passing this bill, New York lawmakers are unequivocally stating they want their residents completely locked out of cryptocurrencies, from generation and mining services to actually being able to easily buy them through an exchange,” said Yaël Ossowski, deputy director of the Consumer Choice Center, a consumer advocacy group.

“If Gov. Hochul signs this bill, it will drive a stake through the Bitcoin mining industry, and states like Florida, Montana, Utah, and Texas will rejoice at the opportunity to invite those entrepreneurs and innovators to establish operations in their states.

“Because Bitcoin, and cryptocurrencies more broadly, will serve a vital role in making finance more inclusive and accessible for sending, receiving, and saving value, we hold it in the interest of consumers that the hashrate (the total computing power of the network) continue to grow, and that better public policy on cryptocurrencies is embraced among states.

“New York, however, has decided to take the NIMBY approach and deny their residents that opportunity,” added Ossowski.

“Cryptocurrency generation and mining firms have an incentive to use the most affordable and renewable energy sources available, and the data backs up this claim. This is a win-win scenario for towns and localities with these facilities, for employees of these firms, residents in these towns that benefit from increased commerce, and energy customers overall,” said Ossowski.

“As cryptocurrency mining proliferated in New York, it opened up new entrepreneurial activities that helped improve the lives of New Yorkers in small communities and large urban centers alike. Passing a ban on these activities, in pursuit of an unclear climate goal, will negate these gains. There is a better path,” added Ossowski.

“The aim of embracing climate goals to ensure 100% renewable energy usage in cryptocurrency generation and mining is well-intended, but a complete ban will have a devastating impact on innovators and entrepreneurs hosting their facilities in the state of New York, and consumers and investors that rely on their services,” said Aleksandar Kokotovic, crypto fellow at the Consumer Choice Center. 

“We understand that the quick rise of cryptocurrency mining raises many questions for residents, particularly when it involves the local economy and environment. However, a more prudent path would be an environmental review conducted by relevant authorities, rather than a wholesale ban and moratorium that would put many projects in legal jeopardy,” added Kokotovic.

***CCC Deputy Director Yaël Ossowski is available to speak on consumer regulations and consumer choice issues. Please send media inquiries to yael@consumerchoicecenter.org.***

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

NIMBY Bitcoin mining ban threatens to lock New Yorkers out of the crypto revolution

By Yaël Ossowski

In 2015, when New York unveiled the BitLicense, a regulatory framework for Bitcoin and cryptocurrency, there was great fanfare among lawmakers. For innovators and entrepreneurs, however, that began what many labeled the “Great Bitcoin Exodus”.

And though it has been reformed since, much of the cryptocurrency space has walled off the Empire State because of the exhaustive regulations, leaving many customers unable to use a host of exchanges, brokerages, and other services. Residents were even prohibited from buying the much anticipated NYCCoin that launched last year.

Though some exchanges and brokers have applied and received the license — usually those armed with lawyers and staffed by former regulators — New Yorkers are still left out of most of the innovation happening with cryptocurrencies. Miners, however, decided to stay.

Bitcoin mining firms have scooped up abandoned plants in Niagara Falls, Buffalo, and more, using hydropower and natural gas to power the computers needed to “unlock” Bitcoin from the network. Regulators, however, are once again keen to put the screws to crypto. 

A bill awaiting its fate in the Senate would impose a two-year moratorium on crypto mining permits, and launch an expansive environmental review.

As a consumer advocate, I view this bill as a death blow to the Bitcoin and cryptocurrency industry, risking jobs and capital that could otherwise scale up renewable energy, and would deny the benefits of crypto and Bitcoin to consumers.

Embracing climate goals to ensure 100% renewable energy usage in mining is well-intended, but a complete ban would have consequences. It will be yet another signal to entrepreneurs and consumers that Bitcoin and other cryptocurrencies are not welcome in New York, and the regulatory framework is too unfavorable to justify investing here.

For people feeling the impact of inflation, and for those who are locked out of the traditional finance and banking sector, their choices will become even more limited.

I understand the rise of cryptocurrency mining raises questions for residents, particularly when it involves the economy and environment. However, a more prudent path would be an environmental review conducted by relevant authorities, rather than a wholesale ban and moratorium that would put many projects in jeopardy.

When it comes to public policy on Bitcoin and cryptocurrency, I would rather side with financial inclusion and crypto innovation than a “Not In My Backyard” mentality.

New Yorkers deserve better: a choice of whether they want to participate in the crypto revolution, rather than have their lawmakers make that choice for them.

Yaël Ossowski is deputy director of the Consumer Choice Center

New Yorkers need prudence, not bans, on Bitcoin and cryptocurrency mining

On May 24, 2022, the Consumer Choice Center sent a letter to New York state lawmakers, warning of the potential consequences to consumers if bill S6486D was adopted, a moratorium on Bitcoin and cryptocurrency mining.

The full letter is available below, or in PDF version here.

Dear Senators,

We write to you to urge you to vote against S6486D, a companion bill to A7389C, which would order a state-wide moratorium on cryptocurrency generation or mining.

If passed, this bill would be a death blow to the Bitcoin and cryptocurrency industry, resulting in thousands of jobs lost in New York, a loss of capital to scale up renewable energy, and would harm all potential benefits to consumers from cryptocurrency projects and initiatives. 

The aim of embracing climate goals to ensure 100% renewable energy usage in cryptocurrency generation and mining is well-intended, but a complete ban will have a devastating impact on innovators and entrepreneurs hosting their facilities in the state of New York, and consumers and investors that rely on their services.

As a consumer group, it may seem odd for us to weigh in on a topic that affects mostly industry players and firms. However, because we believe that Bitcoin, and cryptocurrencies more broadly, will serve a vital role in making finance and economics more inclusive and accessible for sending, receiving, and saving value, we hold it in the interest of consumers that the hashrate (the total computing power of the network) continue to grow, and that better public policy on cryptocurrencies is embraced among state legislatures.

If the Bitcoin hashrate grows specifically in the United States, then we will have more control in how mining develops and how it can benefit the country, its citizens, and our energy grids.. This last part is vital for climate goals, which cannot be said for China or other nations.

According to the latest figures from the first quarter of 2022 on Bitcoin mining specifically, 58.4% of miners are using renewable energy sources, and that number has only increased in several years. In New York, many firms are retooling abandoned processing and power generation plants to build cryptocurrency data centers, and are providing economic value in return that is putting renewable energy to work.

What’s more, this wide-ranging energy diversification is happening at a pace faster than any other industry, leading to more investment in renewable energy capacities and delivery systems. This increased demand is leading to more environmentally favorable energy delivery for customers of all public electricity utilities, and will also help bring down costs. And this is being carried out due to the incentives of firms and individuals who participate in adding hash rate to mining: they want to lower their costs and find better alternatives. 

Cryptocurrency generation and mining firms have an incentive to use the most affordable and renewable energy sources available, and the data backs up this claim. This is a win-win scenario for towns and localities with these facilities, for employees of these firms, residents in these towns that benefit from increased commerce, and energy customers overall.

As cryptocurrency mining has proliferated in New York, it has opened up new entrepreneurial activities that will help improve the lives of New Yorkers in small communities and large urban centers alike. Entertaining a ban on these activities, in pursuit of an unclear climate goal, will negate these gains. There is a better path.

It should not surprise you to know that New York’s previous policy decisions, including the highly criticized BitLicense, have locked many New Yorkers out of the new cryptocurrency ecosystem due to the high compliance costs. Some New Yorkers have chosen to change residences in order to acquire cryptocurrency or to invest in crypto businesses, which they can do in any other state, but more specifically Texas, Wyoming, and Florida.

If this moratorium on cryptocurrency generation comes to pass, it will be yet another signal to entrepreneurs and consumers that Bitcoin and other cryptocurrencies are not welcomed in New York, and the regulatory framework is too unfavorable to justify investing here.

A number of industry organizations, communities, and unions have already expressed their concerns about the impact this bill would have on their families and livelihoods, fearing potential job loss in case industry gets driven away from the state as a result of this legislation. The loss of future investments and new jobs is another concern expressed by many communities in cities such as Rochester, Albany, and Syracuse.

According to the May 2022 Empire State Manufacturing Survey, the general business conditions index has dropped thirty-six points statewide. The last thing many affected and marginalized communities need is a moratorium that would drive businesses away from the state, and keep millions of New Yorkers from being included in a new system of value.

We understand that the quick rise of cryptocurrency mining raises many questions for residents, particularly when it involves the local economy and environment. However, a more prudent path would be an environmental review conducted by relevant authorities, rather than a wholesale ban and moratorium that would put many projects in legal jeopardy.

As consumer advocates, we are strongly opposed to this bill. We believe that New York residents deserve a chance to take part in the nascent industry that so many other states are hoping to accommodate. Using the force of regulation to drive away investments and jobs, stop economic progress, and shut out millions of New Yorkers from a more inclusive financial system would not only be wrong, but it would also be negligent.

Please vote No on S6486D aiming to place a moratorium on proof-of-work and help New York become a hub of innovation that embraces new technologies. New Yorkers should have the opportunity to participate in one of the biggest innovations of our age. With your vote against this bill and a more prudent direction, we can ensure that will happen.

Sincerely Yours,

Yaël Ossowski

Deputy Director

Aleksandar Kokotovic

Crypto Fellow

EU Risks ‘Forever Stalling’ Digital Innovation With A Bitcoin Ban

The European Parliament’s Committee on Economic and Monetary Affairs will vote today on a comprehensive regulatory proposal called MiCA (Market in Crypto-Assets). This proposal has been in the works for months, however, last-minute several amendments have been added to the proposal, which if accepted could effectively ban Bitcoin and cryptocurrency mining in the European Union, pushing thousands of innovators out of Europe.

“By effectively prohibiting the issuance or offering for exchange of crypto-assets that rely on proof-of-work protocols under environmental, social, and governance guidelines, the European Union would make a disastrous move that would obliterate not just the nascent crypto industry but also hurt consumers and once again cede technological leadership in innovation to the United States,” said Aleksandar Kokotović, crypto fellow at Consumer Choice Center, a global consumer advocacy group.

Read the full article here

EU Parliament Risks ‘Forever Stalling’ Digital Innovation If It Accepts Environmental Scrutiny on Proof-of-Work Mining, Bitcoin, and the Crypto Economy

BRUSSELS, BE – The European Parliament’s Committee on Economic and Monetary Affairs will vote today on a comprehensive regulatory proposal called MiCA (Market in Crypto-Assets). This proposal has been in the works for months, however, last-minute several amendments have been added to the proposal, which if accepted could effectively ban Bitcoin and cryptocurrency mining in the European Union, pushing thousands of innovators out of Europe.

“By effectively prohibiting the issuance or offering for exchange of crypto-assets that rely on proof-of-work protocols under environmental, social, and governance guidelines, the European Union would make a disastrous move that would obliterate not just the nascent crypto industry but also hurt consumers and once again cede technological leadership in innovation to the United States,” said Aleksandar Kokotović, crypto fellow at Consumer Choice Center, a global consumer advocacy group.

“If these amendments are adopted, EU regulators will strike a devastating blow to the crypto industry in member states. Not only will Bitcoin mining face immediate scrutiny, but the entire Defi space based on Ethereum, the rising NFT industry, and hundreds of companies will be forced to close, move or ban EU citizens from using their services. By not letting individuals and companies choose technologies they prefer, EU regulators are going against the principles of technological neutrality and are setting a very dangerous and harmful precedent.

“If the EU wants to completely stifle innovation and financial sovereignty of its citizens, this is the way to go. If it wants to lose millions of jobs, talent, and value that come with innovation, then this is a good plan for that. Otherwise, these amendments must not pass,” said Kokotović.

Yaël Ossowski, deputy director of the Consumer Choice Center, said such a vote risks “forever stalling” digital innovation in the bloc on flawed environmental goals, especially in light of the war in Ukraine.

“The Russian war in Ukraine has demonstrated that Europe has been too comfortable in using lofty environmental goals and ideology to mollify its energy policy and risk its security. By using similar environmental metrics based on ESG to halt innovation for Bitcoin and cryptocurrency mining, the European Union risks forever stalling digital innovation and pushing billions in assets and entrepreneurship off the continent,” said Ossowski.

“Pushing the cryptocurrency industry outside of the EU will encourage citizens to circumvent the law and use more loosely regulated platforms and services, all the while depriving Europeans of their consumer choice.

“Bitcoin and other proof-of-work cryptocurrencies represent a revolution in digital money, especially because proof-of-work is a uniquely strong and fair way to settle the creation of digital property when compared to our fiat money system. The incentives to seek cleaner and greener energy exist because of Bitcoin and cryptocurrencies, not in spite of them,” added Ossowski.

“We hope EU parliamentarians recognize the significant folly they’re due to introduce if they deny the voices of consumers and vote for amendments ALT A and ALT G to the Markets in Crypto Assets Proposal that would effectively kneecap proof-of-work currencies in the EU,” said Ossowski.

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

Biden’s Digital Assets Executive Order Gets It ‘Mostly Right’ on Protecting Consumers and Innovation in Crypto

Washington, D.C. – Today, President Biden signed an executive order on digital assets, the first major federal executive action relating to cryptocurrencies in the United States.

Yaël Ossowski, deputy director of the consumer advocacy group Consumer Choice Center, praised the order for getting smart cryptocurrency regulation “mostly right”.

“President Biden’s statements demonstrate the federal government’s acknowledgment that Bitcoin and cryptocurrencies will play a positive role in our nation’s future, and offers some key guidance on ensuring the entire crypto economy remains competitive, transparent, and innovative for consumers,” said Ossowski.

“Protecting consumers from scams, giving legal certainty, and allowing for innovation to create new standards for cryptocurrency rules is a responsible and legitimate role for government when it comes to digital assets. We must recognize that the nascent crypto finance space is ever-changing and rapidly evolving and that overzealous regulation could cripple future potential.

“Biden echoed concerns about Bitcoin and cryptocurrency mining, but we believe the environmental benefits from accepting mining will far outweigh any negative repercussions. Crypto mining is an innovative field that strengthens networks and creates incentives for clean energy,” said Ossowski.

“Last year, my colleagues and I at the Consumer Choice Center released our Principles for Smart Crypto Regulation, underscoring the need for preventing fraud, pursuing technological neutrality, reasonably low taxation, and legal certainty and transparency.

“However, considering the toll of inflation on ordinary Americans and the civil liberties concerns related to consumers’ financial privacy, the plans to research a Central Bank Digital Currency are concerning and will need much more scrutiny in the months to come.

“Overall, we praise the administration’s efforts on keeping cryptocurrency legitimate and accessible and hope any legislation to come will follow these bedrock principles. We’re all going to make it,” concluded Ossowski.

The keys to smart crypto regulation

Freedom convoy aside, regulators can’t only view Bitcoin and other cryptocurrencies through a nefarious lens, David Clement and Yaël Ossowski write

Following the federal government’s invoking of the Emergencies Act, Deputy Prime Minister Chrystia Freeland outlined the temporary regulations on financial institutions that would require surveillance of all blockade-related “forms of transactions, including digital assets such as cryptocurrencies.” The focus on cryptocurrencies was likely sparked by the success of the Honkhonk Hodl Bitcoin fundraising campaign for the Freedom Convoy. Whatever you may think of the convoy, this development has proven that Canadians are paying attention to cryptocurrencies. And now, so is Ottawa.

Freedom convoy aside, regulators can’t only view Bitcoin and other cryptocurrencies through a nefarious lens. These events prove why we need smart regulation of cryptocurrencies, so that we can keep this sector competitive, free, and legitimate.

This month Conservative MP Michelle Rempel Garner tabled a bill to open Canada’s institutions to cryptocurrencies. The bill would require the government to co-ordinate with industry experts to write a framework to help grow the sector in Canada. Since the arrival of Bitcoin in 2008, digital assets have been catapulted to a highly dynamic sector worth $2 trillion. Whether it is exchanges, decentralized finance, or lightning payments, there is no doubt that Bitcoin and other cryptocurrencies represent a new paradigm and opportunity.

Legislation like Rempel Garner’s could ensure that the ecosystem for the sector is protected from overzealous regulation, but only if we enact smart, focused and targeted regulations that do not destroy the industry altogether.

Any institution touching digital assets should have clear guardrails that provide legal certainty. That means no additional red tape when it comes to crypto companies opening bank accounts and insurance policies. We also need assurances that federal agencies will not penalize actors or subject them to costly and burdensome enforcement actions just because cryptocurrencies are involved.

Failing to take these steps risks pushing crypto activity to the black market or seedy jurisdictions, where no rules or regulations will be followed. The history of Prohibition or the Global War on Drugs, which have ballooned criminal and black market activity, provides us an example.

Technological neutrality should be a core tenet of any legislation, meaning that governments should not declare winners or losers. Just like the vinyl record was replaced by the CD-ROM and then the MP3, governments should not choose a preferred crypto technology and instead allow innovation, competition, and consumer choice to make that determination. 

Whether it is algorithmic mining (Proof of Work), interest-bearing accounts, or easy payments, users and entrepreneurs are testing and adopting best practices for the crypto future. If the government endorses one method or outlaws another, because of environmental, financial, or legal concerns, it risks backing the wrong horse and stifling innovation.

Another important aspect of future regulation is moderate taxation. In Estonia, for example, cryptocurrencies are considered property assets but are not subject to Value Added Tax (VAT). Capital gains are taxed accordingly but kept low to ensure investment and innovation while ensuring fairness.

Overall, regulators must not pigeonhole cryptocurrencies only as investments fit for taxing. These are technological tools that empower consumers and foster innovation. A unique crypto asset class, separate from traditional securities, could also help users benefit from the decentralization and encryption that these projects offer while ensuring broader financial adoption.

Rempel Garner’s bill is a step in the right direction, but it is important that what comes of this focuses on these core aspects. Failing to do so will leave Canada, Canadian consumers, and domestic entrepreneurs out in the cold.

Originally published here

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Potentials for Bitcoin in State Government

Our country is dealing with some of the highest inflation in a generation while COVID jitters and government restrictions shake the economy. But state and local policymakers are not powerless to protect their residents. There is always Bitcoin.

In a time of inflation, ballooning government debts, and broader financial uncertainty, a Bitcoin-first policy would be a welcome message.

The main advantage of Bitcoin, apart from being an alternative to the monetary manipulation of Washington, is that it is digital cash based on a decentralized and transparent public ledger that must be verified by thousands of independent nodes, or computers. It is forever limited to just 21 million units, and it can be sent to anyone around the world who has a wallet address. 

Miami Mayor Francis Suarez is one of the most prominent Bitcoin-loving public officials. He has pledged to make Miami a “Bitcoin City” and already receives 100 percent of his paycheck in Bitcoin. He has joined forces with Scott Conger, mayor of Jackson, Tenn., in finding an option to pay city workers in Bitcoin as well.

For his part, Florida Gov. Ron DeSantis has made the boldest move of all, including cryptocurrency payment of state fees as a multi-department pilot project in his 2022 budget.

If East Coast mayors and governors can hop on the Bitcoin train, why not everywhere?

State lawmakers could pass legislation allowing treasurers to hold Bitcoin on the state’s balance sheet. That authorization could also allow local governments to follow suit. 

Lawmakers could also welcome Bitcoin mining, as Texas has already done. Mining is the process of unlocking new blocks of Bitcoin by using computing hash power to solve complex algorithms. Some states already provide a sales tax exemption for data centers. That exemption could be broadened to also benefit Bitcoin miners.

As Jesse Colzani has pointed out, rural areas of the world with low energy costs have the biggest economic advantage in Bitcoin mining. Mining computers only need a reliable internet connection, a cool environment, and access to stable power. Welcoming miners would increase investment in facilities, jobs, and help return dividends to local and state coffers. By making it easier for price and energy-conscious Bitcoin miners to relocate, it could help spur a new energy revolution that would dwarf that of hydroelectricity or natural gas.

At present, some states offer financial service companies licenses via the Nationwide Multistate Licensing System & Registry. For Bitcoin specifically, this means registered brokers, or “money transmitters”, can apply for licenses in multiple states that are honored in others. That is a great first step, but it should be even easier.

By offering full reciprocity of money transmitter licenses, any state could ensure that Bitcoin firms could set up shop without hassle in a big city or small town alike. That would be similar to the reciprocity of occupational licenses, which reduce barriers to work and make it easier for qualified individuals to work anywhere. Let’s do the same for the money of the future.

The quick-moving technology of the crypto space is numbing at times, but the role of government is to set clear and easy guidelines for entrepreneurs and citizens.

By opening itself to Bitcoin and the broader cryptocurrency space, states like Texas, North Carolina, or Idaho would have an advantage over the highly regulated financial markets based in New York or California. Low taxes coupled with a light-touch regulatory environment and openness to entrepreneurship would be key to this evolution.

While there are vast philosophical questions invoked by the role of digital assets, the advantage of giving more choice to state residents cannot be overstated. It is a real alternative.

By instituting pilot projects to let citizens offer bitcoin as payment for state fees or keeping it on state balance sheets, giving crypto options for state employees, and easing the regulatory burdens faced by crypto entrepreneurs, states have the opportunity to ensure their residents are ready for the digital age, to the moon and beyond.

Originally published here

“Crypto” vs Bitcoin and Why It Matters for Policy

By Yaël Ossowski

One frequent social media criticism against our consumer organization is that we discuss smart policy on “crypto” more broadly rather than just Bitcoin.

Realistically, that means we focus on the significant regulatory hurdles to the general “crypto” economy rather than focusing solely on the merits of Satoshi’s invention of Bitcoin and a path to its universal adoption.

Whatever our thoughts on Bitcoin as the one and true asset, the political narrative is about a category of digital assets and digital cash. Regulators don’t care if you’re stocked up on DOGE or BTC, they just know that you have it, it has value, and they want a cut.

At this moment, there are thousands of online crypto services, wallets, and apps that are only available to you based on your passport or your street address.

And this only gets worse if we don’t push smart and innovation-friendly solutions that will keep the confiscatory and bureaucratic tendencies of national and supranational governments at bay.

That’s because the greatest impediment to any growth in the crypto economy, “hyperbitcoinization”, or whatever you want to call it, is the on and off-ramps. Fiat to crypto, crypto to fiat.

Until people independently charge and get paid in crypto, or create mining collectives in their communities, the on-off ramps will shape adoption, and because these ramps are governed by financial regulators, there will always be a bottleneck.

Or a threat that only certain countries with more relaxed rules will allow on-off ramps, which will necessarily limit market penetration and any crypto future.

The lower we can make the transaction costs (as an economic principle, not dollars and cents) to on-off ramping, the closer we can get to broad crypto adoption. And that means treating crypto as a category in any policy debate or conversation, whatever our personal preference

The arguments of the best cryptocurrencies can and should be fought, and coiners already vote with their wallets, their code, and their clicks. But regulation matters.

If you’re interested in learning more, check out our principles for smart crypto regulation here, and support our efforts to promote these principles at the legislative level by supporting our BTCPay server below, or with altcoins on our donate page.

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