Bitcoin has seen an impressive bull run this year, rising by more than 200% from 2018 lows. However, since Facebook unveiled plans to develop its own digital currency, Libra and regulators poured cold water on these plans, bitcoin has been bearing the brunt of increased scrutiny by lawmakers. This has led to an abysmal price performance as investors shy away from taking leaps of faith.
Bitcoin detractors have one belief in common: government regulators will eventually ban bitcoin and these highly volatile digital assets will then vanish from the face of the earth, case in point, Nouriel Roubini, a long time cryptocurrency hater. Additionally, earlier in May, Congressman Brad Sherman made headlines as he called for Congress to impose a ban on bitcoin. However, US lawmakers are now recognizing that it would be impractical to ban bitcoin.
Bitcoin Cannot Be Banned, It’s A Global Innovation
Yesterday, the US Senate House Committee on Banking, Housing and Urban Affairs probed cryptocurrency and blockchain experts during a hearing titled, “Examining Regulatory Frameworks for Digital Currencies and Blockchain.” During this hearing, the Senate Banking Committee Chairman, Mike Crapo (R-ID) expressed his views regarding bitcoin, conceding that the US government would be backing the wrong horse in a bitcoin ban.
“If the United States were to decide – and I’m not saying that it should- if the United States were to decide we don’t want cryptocurrency to happen in the United States and tried to ban it, I’m pretty confident we couldn’t succeed in doing that because this is a global innovation.”
These comments by Crapo come after US Congressman Patrick McHenry shared similar remarks during an interview on CNBC’s Squawk Box where he asserted that “there is no capacity to kill bitcoin”.
The US Government Should Be At The Forefront Of Digital Assets Innovations – Mike Crapo
During the hearing, Jeremy Allaire, the founder, and CEO of Circle, explained to the senate how bitcoin has changed the paradigm of currencies, making transactions seamless. He also cited that countries that fully embrace bitcoin would have an edge over their rivals.
He explained that;
“I think the challenge that we all face with this is some of these cryptocurrencies – they’re just a piece of open-source software. There’s nothing else. It exists on the internet, it’s open-source software, anyone can implement it, it runs wherever the internet runs, and these have a monetary policy where these assets are algorithmically generated (…) That is a challenge that every government in the world now faces – that money, digital money, will move frictionlessly everywhere in the world at the speed of the internet.”
Mr. Crapo alludes that bitcoin is here to stay, suggesting the US government take the lead in embracing it as it will reap huge benefits from doing so.
“It seems to me that these technologies and other digital innovations are inevitable. They could be beneficial and I believe that the US should lead in developing these innovations and what the rules of the road should be.”
The Bottom Line
Notably, it’s impossible to ban bitcoin. The only thing that the US government can do is cripple its prices by intensifying regulations around bitcoin. In the case of regulations, Jeremy urged Congress to incorporate regulations that bolster the success of cryptocurrencies and blockchain without smothering their operations.
“It is vital that we allow innovators room to grow in the United States. Congress should adopt national policies that define and establish digital assets as a new asset class including appropriate rules and exemptions.”
The crypto community is now in a wait-and-see mode as to the steps the United States government will take regarding the regulation of bitcoin and other cryptocurrencies in the future.