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Our Well-Timed Warning on FTX, Bankman-Fried and Future Cryptocurrency Regulations

This letter was sent to Senators, Congressmen of relevant committees, and regulators in the Consumer Financial Protection Bureau, Securities and Exchange Commission, and Commodity Futures Trading Commission in the aftermath of the FTX collapse. The previous letter can be viewed here.

Referring to the previous letter we sent to lawmakers and regulators on October 26, 2022, warning of the influence and inherent financial risks posed by then FTX CEO Sam Bankman-Fried and his related companies, here we offer our thoughts on what you should consider for future regulation on digital assets, cryptocurrencies, and the platforms that use them.

As you will have read by now, the alleged criminal actions of Mr. Bankman-Fried and his affiliated companies (FTX International, FTX Europe, Alameda Research, etc.), have led to several bankruptcy filings, will likely lead to expensive lawsuits, and, without a doubt, will invite investigations and questions from your colleagues and committees in Congress. All of these are necessary and prudent.

The halting of withdrawals for billions of dollars of customer funds, the intermingling of company and customer assets, the collateralization of new crypto tokens backed by nothing, and the unsustainable leverage conspired to create one of the most calamitous events in recent financial history. It is a stain on the reputation of creative entrepreneurs and builders providing value in the cryptocurrency space. This is made all the more troubling by the influence of this company and its leaders in our nation’s capital.

The significant influence of Mr. Bankman-Fried and his companies among Congressional members and staff, donations to political campaigns, and the close relationship with regulators present a damning case of what happens when politically connected firms aim to control and shape legislation without input from consumers and citizens.

While decision-makers were eager to meet with Mr. Bankman-Fried and mirror his biased suggestions on cryptocurrency policy in legislation and enforcement actions, consumer groups like ours sounded the alarm about the conflicts of interest detrimental to sound and principled policy for the millions of Americans who use and invest in cryptocurrencies like Bitcoin.

The Consumer Choice Center began writing publicly about the conflicts of interest and risky financial dealings of these companies and Mr. Bankman-Fried in September 2022, and how they would pose a considerable risk both to the legitimate cryptocurrency industry and to the savings and investments of millions of consumers. We remain steadfast in our conviction.

That said, as consumer advocates, we remain optimistic about the promises of Bitcoin, its cryptocurrency offspring, and the innovative blockchains, decentralized technologies, and crypto services that have evolved around them.

Users of decentralized technologies, however, do not need an industry approach to regulation. Regulations exist to set the rules of the game, not to chart the leaders of the game. This previous approach gave cover to FTX and its affiliated companies and has led to the disaster we see today.

The main caution we invoke, therefore, is that many proposed regulations aim to cement existing industry players and lockout innovative upstarts, while at the same time requiring the same restrictive rules that caused many people to explore cryptocurrencies in the first place.

As we have stated, if rules on crypto and its customers help solidify the financial portfolios, positions, and stock prices of only a select few companies, this will drive innovation away from our shores.

The bad actions of this particular company, while shocking and injurious to many, reflect the mistakes and alleged crimes of those involved. They do not, in any certain terms, condemn the wonderful possibilities of a crypto future nor the millions of consumers who responsibly use these technologies.

The frauds allegedly perpetrated are not too far removed from those of regulated financial firms that have deservedly reaped the consequences of misbehavior, either by the market or law enforcement. That the end product was cryptocurrencies instead of credit default swaps or mortgages makes no difference.

Fraud is fraud and remains illegal no matter what product a company is selling.

This is a stark contrast to the system of fractional-reserve banking that now underlies much of the American financial system and creates the incentives of malfeasance aided by loose monetary policy.

We should not mistake the ills of the current system for those of cryptographically secure digital assets.

With that in mind, rather than the approaches of several self-interested industry leaders, consumers deserve regulation on cryptocurrencies and digital firms that enforce existing rules on fraud (known as “rug pulls”), remain technologically neutral, offer reasonable and minimal taxation, and provide legal transparency. Punishing fraud and abuse, insider trading, and self-dealing should remain the focus.

As consumer advocates, we promote the principle of “self-custody” for crypto consumers, holding private keys to digital assets. This is a cryptographically secure method of controlling cryptocurrencies as originally intended, and one that should be an industry standard. This is the strongest method by which exchanges, brokerages, and those who regulate them can protect consumers. 

The aim of cryptographic digital assets and decentralized digital cash, since the founding of Bitcoin in 2008 by Satoshi Nakamoto, has centered on creating permissionless, peer-to-peer transactions offering a final settlement in a decentralized manner. That should be the guiding principle rather than temporary self-interest.

The whims of a select few industry players, however successful they may be, cannot be the guiding light for the future of decentralized digital money, as the saga of FTX has proven.

The Consumer Choice Center created a policy primer on Principles for Smart Cryptocurrency Regulations in September 2021 to highlight these concerns and we hope you will apply them.

We remain at your disposal for any further exploration of how best to craft rules, guidance, and regulation on the future of cryptocurrencies in our country, so that all society may benefit.

Sincerely yours,

Yaël Ossowski

Deputy Director

Consumer Choice Center

Aleksandar Kokotovic

Crypto Fellow

Consumer Choice Center

EU’s Bitcoin and Cryptocurrency Surveillance Rules to Harm Consumers

The European Union’s final trialogue between Council, Commission, and Parliament has finished crafting the first part of legislation that makes up the new EU anti-money laundering package aligned with the Markets in Crypto-assets rules (MiCA).

These rules are drafted following recommendations from the so-called Travel Rule of the Financial Action Task Force (FATF), a global treaty organization that combats money laundering. The aim of this rule is to effectively track financial assets, and included crypto assets like Bitcoin and other cryptocurrencies beginning in 2019,

The EU’s proposed rules introduce regulations that are far from technologically neutral, are detrimental to innovation, and will harm consumers who depend on cryptocurrency services.

Crypto asset service providers are obliged to keep records and provide traceability from the first euro compared to traditional finance where that requirement is set for transfers larger than 1000 EUR.

Crypto asset service providers will be required to collect information and apply enhanced due diligence measures with respect to all transfers involving non-custodial wallets. A number of risk-mitigation measures will be in place for cryptocurrency exchanges before establishing a business relationship with exchanges in third countries. 

Putting such stringent regulations on 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 – depriving consumers of their ability to safely and securely enjoy crypto services.

Putting these high regulatory costs in place is already influencing the decision-making of crypto asset service providers, now considering changing jurisdictions and moving to more favorable ones. These ham-handed regulations won’t only affect the industry, but many of the consumers who rely on them, pushing them to use non-EU exchanges. 

We have seen consumers voting with their feet in the past, choosing service providers in different countries to avoid similar measures, and this will be no exception.

With more Orwellian stipulations requiring that a consumer who sends or receives more than 1000 EUR to or from their own non-custodial wallet be verified by the crypto exchange, we will be seeing a number of issues arising both for the industry as well as for the consumers, putting additional costs to all transfers. 

The European Union has been criticized in the past for its overregulation especially when it comes to innovative technologies. Even though the EU has been relatively early in creating a comprehensive legal framework for cryptocurrencies, a number of the regulations agreed on will undoubtedly bring harm to both the industry and the retail consumer.

Surveillance of each consumer coupled with copious regulations aimed at crypto asset service providers will once again leave EU citizens looking for alternatives within jurisdictions more open to innovation, decentralization, and consumer-orientated regulatory frameworks.

The entire point of cryptocurrencies is to provide an alternative to the government-controlled fiat money system. These rules aim to disrupt that aim, principally by forcing industry players to comply with even stricter rules imposed on traditional finance institutions.

There is a better way to do this in order to promote innovation, protect consumers, and create a better ecosystem that will benefit all Europeans.

Our Principles for Smart Cryptocurrency Regulations policy primer is available to all regulators, and offers core principles to uphold in order to create regulatory guidance for the nascent industry without hurting innovation.

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 to entrepreneurs and consumers in the crypto space.

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.

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.

If you would like to help us defeat harmful Bitcoin and cryptocurrency regulation, also using crypto, consider investing value in the Consumer Choice Center via our Donate page.

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 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.

“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.

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.

Cryptocurrency Regulations Should Not Stifle the Innovative Potential of Blockchain Technology

By Nur Baysal | 12. February 2018 Recently, the prices of cryptocurrencies like Bitcoin and Ethereum made new headlines: After reaching a staggering all-time-high of $19,783 in December, the price of Bitcoin lost more than half of its value in January and February, dragging the price of other cryptos down alongside it. During this time, a plethora […]

Poll: Consumers say ‘hands off’ cryptocurrency, Bitcoin and Blockchain

CONTACT: Frederik Roeder Managing Director Consumer Choice Center 8. February 2018 Poll: Consumers say ‘hands off’ cryptocurrency, Bitcoin and Blockchain BERLIN, DE – In an online Twitter poll conducted by the Consumer Choice Center, 85 percent of respondents say they don’t want governments slowing down consumer innovation by outlawing cryptocurrencies and blockchain businesses. While not a scientific survey, […]

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