Casey Wagner

The White House has included crypto in its updated list of areas to watch in emerging technology.&nbsp;



In the latest national security standards report, President Biden’s team lays out parts of the tech industry it will “prioritize” creating standards around.&nbsp;



The strategy is designed to “strengthen both the United States’ foundation to safeguard American consumers’ technology and U.S. leadership and competitiveness in international standards development,” the White House said in a <a href="https://www.whitehouse.gov/briefing-room/statements-releases/2023/05/04/fact-sheet-biden-harris-administration-announces-national-standards-strategy-for-critical-and-emerging-technology/">statement</a> Thursday. Having universal standards ensures technologies are consistent in terms of safety and security, the statement added.&nbsp;



The federal government said it would be focusing on “digital identity infrastructure and distributed ledger technologies, which increasingly affect a range of key economic sectors,” per the <a href="https://www.whitehouse.gov/wp-content/uploads/2023/05/US-Gov-National-Standards-Strategy-2023.pdf">report</a>.&nbsp;



The list also includes biotechnologies, artificial intelligence and semiconductors.&nbsp;



The report comes just after the White House Council of Economic Advisers (CEA) released a <a href="https://www.whitehouse.gov/cea/written-materials/2023/05/02/cost-of-cryptomining-dame-tax/">Digital Asset Mining Excise</a> (DAME) <a href="https://blockworks.co/news/bitcoin-mining-tax-biden">tax on crypto mining firms</a> Tuesday. If passed, it would trigger a 30% tax on the cost of the electricity used by bitcoin mining to address “the economic and environmental costs,” the CEA said.&nbsp;



The proposal has the industry up in arms. Public bitcoin mining firm <a href="https://blockworks.co/tag/riot-blockchain">Riot</a> said the tax would set the US back as a leader in the crypto space.&nbsp;



“It’s hard to overstate how bad an idea this is,” Riot told Blockworks. “This proposal would push financial innovation and jobs away from America to other jurisdictions overseas, while causing harmful environmental outcomes and increased national security risks for the United States.”



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White House Tackles Digital Identity, Distributed Ledgers in New Tech Standards

Sebastian Sinclair

A new MIT masters thesis from a US Space Force major contends bitcoin is not just a form of internet money — but a weapon to be utilized by the Pentagon in modern warfare.



In an exhaustive 400-page dissertation, Major Jason Lowery claims bitcoin’s proof-of-work consensus mechanism presents a massive shift in the way world powers could wage war.



Instead of boots on the ground or nukes in the air, Lowery suggests nations battle by competing for Bitcoin block rewards, <a href="https://www.politico.com/newsletters/digital-future-daily/2023/03/30/space-force-major-to-pentagon-mine-bitcoin-00089745" target="_blank" rel="noreferrer noopener">Politico reported</a> Thursday.



“Space Force” is the newest brand of the US Armed Forces, created in December 2019. It&#8217;s responsible for organizing, training and equipping military persons across the stars in a bid to protect US and allied interests.



Lowery is an active-duty US Space Force astronautical engineer and US National Defense Fellow at MIT whose job it is to advise senior military personnel on the implications of bitcoin, according to a bio of his latest book.&nbsp;Politico says it confirmed his rank with an Air Force spokesperson.



Lowery&#8217;s thesis was released as a <a href="https://www.amazon.com/Softwar-Projection-National-Strategic-Significance/dp/B0BW358F37" target="_blank" rel="noreferrer noopener">book</a> in February under the title &#8220;Softwar: A Novel Theory on Power Projection and the National Strategic Significance of Bitcoin.&#8221; It&#8217;s said to describe a scenario in which governments duke it out with hashrate; fighting something akin to a Cold War, where the spoils are bitcoin and bragging rights.



The blurb reads:



&#8220;Using scientific concepts from biology, evolution, anthropology, political science, and computer theory, Lowery summarizes the dynamics of power projection in human society and provides an argument for why emerging proof-of-work technologies (namely Bitcoin) will have a dramatic impact on how humans organize, cooperate, and compete on a global scale by empowering populations to project physical power in, from, and through cyberspace.&#8221;



Bitcoin’s consensus could also be harnessed to deter denial-of-service attacks, Lowery reportedly reasons, which would make it costly and therefore prohibitive for bad actors to spam software systems based on its principles.



Should the asset be viewed through that lens, it would serve the US’s interest to protect the network and foster an industry for domestic crypto mining, or so the thinking goes.&nbsp;



<h2 class="wp-block-heading">Bitcoin is a &#8216;national strategic imperative&#8217;</h2>



In a stark warning to US policymakers, the major contends the country should support and adopt bitcoin immediately in a bid to avoid losing its status as a global superpower.



That’s just the kind of message of which industry proponents have hoped for years.&nbsp;Although, it&#8217;s probably unlikely.



&#8220;Major Lowery concludes that Bitcoin represents a national strategic imperative that the US should support and adopt as quickly as possible, else it risks losing its lead as a global superpower in the 21st century,&#8221; states the book&#8217;s description. 



Instead, the current campaign employed by US regulators and the <a href="https://blockworks.co/news/bidens-view-on-crypto" target="_blank" rel="noreferrer noopener">White House</a> has been to offer up no support in that regard, opting to <a href="https://blockworks.co/news/crypto-regulation-policy-law" target="_blank" rel="noreferrer noopener">regulate digital assets through litigation</a> with little discourse, critics argue.&nbsp;Various arms of the US government have also routinely <a href="https://jlopp.github.io/us-marshals-bitcoin-auctions/" target="_blank" rel="noreferrer noopener">sold</a> bitcoin seized as a result of criminal cases.



“Our first amendment rights to free speech will not protect you from government regulators who are actively maneuvering to ban bitcoin under the argument that it represents a threat to national security,” <a href="https://twitter.com/JasonPLowery/status/1640808749328748574?s=20" target="_blank" rel="noreferrer noopener">Lowery tweeted</a> Tuesday.



“Your best bet is to argue that it would be a national strategic security hazard to ban bitcoin. It would be against the second amendment (not just the first). It&#8217;s an undefeatable argument, you just have to have the courage to use it,” he said.



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Pentagon, Mine Bitcoin To Stay Superpower: Space Force Major

The White House’s Council of Economic Advisors published its annual report this week, dedicating an entire chapter of its 500 pages to digital assets.&nbsp;



The crypto industry is seeking to exist outside of government bounds, the report alleges, which sets it up for failure.&nbsp;



“Digital asset proponents are now aspiring to create a decentralized financial system without relying on governments,” the CEA <a href="https://www.whitehouse.gov/wp-content/uploads/2023/03/ERP-2023.pdf">report</a> reads. “Proponents have been relearning the lessons from previous financial crises the hard way.”&nbsp;



Many industry members found the report troubling, especially given its publication during a time of extreme regulatory uncertainty.&nbsp;



“The authors [of the CEA report] repeatedly cite crypto’s most sordid bad actors as broadly indicative of the industry as a whole,” Galaxy analysts wrote in a report Friday. “When referring to frauds, they use BitConnect, one of the most blatant scams of the 2017 bull run (which by the way was exposed by the crypto community in real time and only charged by the SEC 4 years after the scam had run its course in 2021).”&nbsp;



Others pointed out that the report’s attitude toward crypto is only going to push companies offshore, taking innovation away from the US and potentially setting up investors to have exposure to risky business practices.&nbsp;



“While other countries are increasingly receptive to the burgeoning crypto industry, some in government appear increasingly allergic to its promise, sending companies and innovators offshore,” Kristin Smith, CEO of the Blockchain Association, said in a statement this week. “Crypto is here for good, promising a safer and sounder financial system and a consumer-centric internet.”



There are US regulators trying to push crypto out, SEC Commissioner Hester Peirce confirmed <a href="https://blockworks.co/news/gensler-too-much-too-fast">in an appearance before Florida International University law students</a> earlier this week.&nbsp;



“Some people in the regulatory world are perfectly fine with having innovation in crypto move away from the United States because they don’t think that there’s anything positive that’s going to come out of it,” Peirce said. “I tend to be of a different mindset.”



The CEA report goes on to quote prominent computer scientists and their issues with crypto as evidence that the underlying technology may not be legitimate.&nbsp;



“But the authors fail to note that there are thousands of prominent computer scientists that believe the technology is transformational or are even working on it,” Galaxy researchers said. “For example, the authors fail to note that MIT, Stanford, [U.C. Berkeley], University College of London, and hundreds more prominent universities are deep into conducting significant technical research on blockchain and crypto assets, or to mention the myriad prominent cryptographers and computer scientists who advocate for and develop on blockchain technology.”&nbsp;



The report came during an unexpectedly explosive week for cryptocurrency regulatory actions. <a href="https://blockworks.co/news/do-kwon-indicted-for-fraud">Do Kwon, the long-wanted founder of collapsed Terraform Labs</a>, was arrested and indicted, <a href="https://blockworks.co/news/sec-serves-coinbase-in-latest-alleged-crypto-securities-violation">Coinbase was served a Wells notice</a>, and the SEC targeted <a href="https://blockworks.co/news/sushiswap-served-by-sec">SushiSwap with new securities violations</a>.&nbsp;



Peirce said SEC Chair Gary Gensler’s agenda is ambitious, so the industry may want to brace for additional enforcement actions.



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White House ‘Allergic to Promise’ Says Crypto Industry

Ben Strack

<div id="highlights-block_6328925cda601" class="highlights">
 <ul>
 <li>More than half of respondents say a US CBDC would increase risks to privacy and security</li>
 <li>Survey was published the same day the White House released its first crypto framework</li>
 </ul>
 
</div>



As the federal government continues mulling how to best regulate crypto, a recent poll found that 55% of those surveyed said traditional banking regulations make them trust the industry more than the digital assets space.



The poll, published Friday by the Independent Community Bankers of America (ICBA), indicated that 71% believe investing in crypto is risky. Thirty-five percent of respondents are unaware that traditional banking sector laws do not apply to the segment.



The survey was released the same day that the White House shared <a href="https://www.whitehouse.gov/briefing-room/statements-releases/2022/09/16/fact-sheet-white-house-releases-first-ever-comprehensive-framework-for-responsible-development-of-digital-assets/" target="_blank" rel="noreferrer noopener">its first “comprehensive framework”</a> for the crypto segment. The report came roughly six months after <a href="https://cms.blockworks.co/biden-signs-crypto-executive-order-promoting-responsible-innovation/" target="_blank" rel="noreferrer noopener">the Biden Administration’s executive order</a> in March that tasked government agencies with creating a pathway for regulating crypto and identifying the risks and potential for innovation within the space.



Reports so far gathered by President Biden recommend that agencies, such as the SEC and Commodity Futures Trading Commission (CFTC), should “aggressively” look to combat crypto-related crime, according to the framework published Friday.&nbsp;



Some industry watchers <a href="https://cms.blockworks.co/white-houses-latest-crypto-framework-lacks-clarity-some-say/" target="_blank" rel="noreferrer noopener">told Blockworks</a> Friday that the White House’s framework lacked specifics and leaned too heavily on the message of regulating by enforcement. 



The White House’s report said that the May crash of Terra’s algorithmic stablecoin and subsequent insolvencies that wiped out about $600 billion of investor funds highlights the need for more crypto education.



The Financial Literacy Education Commission (FLEC) will lead efforts to help investors understand crypto risks, identify fraudulent practices and learn how to report misconduct.



The ICBA poll also discovered that more than half of those surveyed — including a bipartisan majority — say the establishment of a US central bank digital currency (CBDC) would increase the risk of their personal financial privacy and security being breached.



While the Biden administration believes a CBDC could be beneficial, further research and development on the technology that would support a digital form of the dollar is needed, according to the framework.



“Policymakers should prioritize protecting national security amid catastrophic developments in the crypto markets while collaborating on a comprehensive regulatory framework that utilizes more effective alternatives to a US CBDC — including the <a href="https://www.frbservices.org/financial-services/fednow/about.html" target="_blank" rel="noreferrer noopener">FedNow</a> instant payments service,” ICBA President Rebeca Romero Rainey said in a statement.



The ICBA poll was conducted by Morning Consult last month and surveyed roughly 2,000 registered voters.



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Americans Understand Crypto Risks, but Not Regulations, Survey Finds

<div id="highlights-block_6324cf0d90fff" class="highlights">
 <ul>
 <li>Blockchain Association’s director calls the report “a missed opportunity to cement US crypto leadership”</li>
 <li>The Treasury department intends to publish risk assessments on DeFi and NFTs next year</li>
 </ul>
 
</div>



Six months after unveiling <a href="https://cms.blockworks.co/bidens-crypto-executive-order-may-be-watershed-moment-despite-lack-of-specifics/" target="_blank" rel="noreferrer noopener">an executive order</a> on digital assets, President Biden’s administration on Friday rolled out a “comprehensive” crypto framework that some industry participants say is lacking in details.&nbsp;



Since calling on a swath of agencies to study how to oversee crypto responsibly, the president has so far received nine reports, <a href="https://www.whitehouse.gov/briefing-room/statements-releases/2022/09/16/fact-sheet-white-house-releases-first-ever-comprehensive-framework-for-responsible-development-of-digital-assets/" target="_blank" rel="noreferrer noopener">the White House said</a>.&nbsp;



The reports encourage the SEC and Commodity Futures Trading Commission (CFTC) “to aggressively pursue investigations and enforcement actions against unlawful practices in the digital assets space,” among other recommendations.



The call comes after industry watchers told Blockworks last month <a href="https://cms.blockworks.co/crypto-industry-eyes-secs-regulation-by-enforcement-ramp-up/" target="_blank" rel="noreferrer noopener">they expect “regulation by enforcement” to continue</a> in the absence of concrete crypto legal frameworks.



Robert Baldwin, head of policy at the Association for Digital Asset Markets (ADAM), said the framework’s lack of legislative recommendations, or a clear pathway for SEC and CFTC cooperation, will likely result in “continued scattershot regulation by enforcement” that may not be technologically neutral.&nbsp;&nbsp;



“This is, in my mind, a bad outcome, which stands in juxtaposition to recent happenings in Congress, where we are starting to see bipartisan consensus formed around appropriate vehicles for market regulation and protections,” Baldwin told Blockworks.&nbsp;



Sens. Debbie Stabenow, D-Mich., and John Boozman, R-Ark., proposed in August the <a href="https://cms.blockworks.co/bitcoin-ether-to-be-regulated-as-commodities-by-cftc-per-new-senate-bill/" target="_blank" rel="noreferrer noopener">Digital Commodities Consumer Protection Act</a>, which would place commodities under the CFTC’s jurisdiction.



CFTC Chair Rostin Behnam <a href="https://cms.blockworks.co/cftc-preparing-to-oversee-crypto-behnam-tells-senators/" target="_blank" rel="noreferrer noopener">told senators</a> during a Thursday Senate Agriculture Committee hearing that the commission is prepping to become the crypto industry’s watchdog.&nbsp;



<h3 class="wp-block-heading">A focus on illicit finance, risks</h3>



The White House’s latest framework dedicates a section to fighting illicit finance, highlighting the May crash of Terra’s algorithmic stablecoin and the subsequent wave of insolvencies that wiped out roughly $600 billion of investor funds, the guidance says.



Biden is evaluating whether to call upon Congress to amend the Bank Secrecy Act and other laws against unlicensed money transmitting to apply explicitly to digital asset service providers, such as exchanges and NFT platforms.



<a href="https://cms.blockworks.co/binance-under-investigation-over-bank-secrecy-act-report/" target="_blank" rel="noreferrer noopener">Reuters reported earlier this month</a> that US authorities are investigating whether Binance violated the Bank Secrecy Act.&nbsp;



Biden also may look to allow the Department of Justice to prosecute digital asset crimes in any jurisdiction where a victim of those crimes is found, the latest report states.



But Sheila Warren, CEO of the Crypto Council for Innovation, said the White House’s Friday update “seems to kick the can down the road” without new and clear recommendations.&nbsp;&nbsp;



“This is surprising given the clear instructions from the [executive order] and work from members of Congress to move things forward,” Warren told Blockworks in an email. “Regulation by enforcement is not regulatory clarity. If we regulate by enforcement, it also gives other countries a clear runway to figure out how the tech works for their interests, which may be contrary to the US&#8217;s.”



As for future reports, the Financial Stability Oversight Council (FSOC) is set to publish one in October focused on labeling digital assets’ financial stability risks and identifying regulatory gaps.



The Treasury Department intends to complete an illicit finance risk assessment on decentralized finance by February 2023 and an assessment on NFTs by July 2023.



The framework adds that while a US central bank digital currency (CBDC) has the potential to offer significant benefits, further research and development on the technology that would support a digital form of the dollar is needed.&nbsp;&nbsp;



Kristin Smith, executive director of Blockchain Association, called the framework “a missed opportunity to cement US crypto leadership.”



“While intended to be part of a broader government and stakeholder effort to bring better regulation to crypto assets, these reports focus on risks – not opportunities – and omit substantive recommendations on how the United States can promote its burgeoning crypto industry, including job creation, improvements to the financial system and expanded access for all Americans,” Smith told Blockworks in an email.



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White House’s Latest Crypto Framework Lacks Clarity, Some Say

Sam Reynolds

<div id="highlights-block_6160aed40d072" class="highlights">
 <ul>
 <li>As digital assets become closely ingrained into the broader economy, the Biden White House wants to take a serious look at crypto across the whole of government </li>
 <li>This comes days after the US Department of Justice announced the creation of a National Cryptocurrency Enforcement Team</li>
 </ul>
 
</div>



An executive order on crypto is in the process of being drafted by the Biden administration, reports <a href="https://www.bloomberg.com/news/articles/2021-10-08/cryptocurrency-regulation-biden-considers-executive-order-for-agencies?srnd=markets-vp" target="_blank" rel="noreferrer noopener">Bloomberg News</a>. Unlike other moves on cryptocurrencies, which were related to aspects such as <a href="https://cms.blockworks.co/senate-fails-to-amend-crypto-tax-provision-in-infrastructure-bill/" target="_blank" rel="noreferrer noopener">taxation</a>, this move from the White House would create a whole of government approach to the issue and task various federal agencies to study crypto and analyze how it impacts the area of their specific jurisdiction. 



According to Bloomberg, this is everything from financial regulation, economic innovation, national security, to taxation. This differs from previous announcements from the White House, which have specifically focused on taxation and law enforcement.&nbsp;&nbsp;



This comes as President Biden’s pick for the Office of the Comptroller of the Currency, <a href="https://cms.blockworks.co/bidens-bank-regulator-pick-is-critic-of-big-banks-and-crypto/" target="_blank" rel="noreferrer noopener">Saule Omarova</a>, a professor at Cornell Law School, announced she wants to “end banking as we know it” via greater government oversight of Wall Street and cryptocurrencies. 



“The success of Bitcoin paved the road for the subsequent emergence of numerous crypto-assets purporting to challenge the supremacy of sovereign money,” she previously wrote. Omarova has not yet been confirmed as OCC chair.&nbsp;



<a href="https://cms.blockworks.co/us-treasury-report-crypto-transfers-of-10000/" target="_blank" rel="noreferrer noopener">Earlier this year,</a> the White House had signaled that crypto was on its radar when it announced a crackdown on tax evasion and the facilitation of illegal activity via crypto. 



Just on Wednesday, On Wednesday, the Department of Justice announced the <a href="https://cms.blockworks.co/us-justice-department-to-launch-national-cryptocurrency-enforcement-team/" target="_blank" rel="noreferrer noopener">creation</a> of a National Cryptocurrency Enforcement Team (NCET), to tackle complex investigations and prosecutions of criminal misuses of cryptocurrency.



“Cryptocurrency already poses a significant detection problem by facilitating illegal activity broadly including tax evasion,” the Treasury department said in a May release. “This is why the President’s proposal includes additional resources for the IRS to address the growth of cryptoassets.”



This summer’s <a href="https://cms.blockworks.co/us-crypto-tax-crackdown-in-congress-crosshairs/" target="_blank" rel="noreferrer noopener">$1.2 trillion infrastructure deal</a> was held up in Congress because of issues relating to taxes. An initial draft of the bill required crypto “brokers” to have tax reporting requirements, and the first language had requirements that would be impossible for many to meet. 



The price of bitcoin has remained fairly stable in the hour since Bloomberg’s report; down 0.2% to $54,484, according to <a href="https://www.coingecko.com/en" target="_blank" rel="noreferrer noopener">CoinGecko</a>.

Bitcoin Flat on Reports of White House Crypto Executive Order

<div id="highlights-block_614dff334b5d1" class="highlights">
 <ul>
 <li>Saule Omarova is calling for greater oversight of big banks and new financial technologies, including cryptocurrencies </li>
 <li>The nomination will have to receive Senate approval</li>
 </ul>
 
</div>



President Biden has named his pick for the head of Office of the Comptroller of the Currency, and, if confirmed, big banks and digital asset firms are in for a rude awakening.&nbsp;



The White House <a href="https://www.whitehouse.gov/briefing-room/statements-releases/2021/09/23/president-biden-announces-key-nominations-for-financial-regulation-and-investor-protection/">announced</a> the nomination of Saule Omarova, a professor at Cornell Law School, on Thursday. Omarova has said she wants to “end banking as we know it,” including greater government oversight of Wall Street and cryptocurrencies.&nbsp;



The OCC, a 3,500 person agency, is responsible for regulating and supervising national banks and federal savings associations. It also oversees related business practices of banks, including mergers and newer areas of engagement, such as cryptocurrency.&nbsp;



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">“If confirmed, I will work hard to make sure that our banks remain stable, strong and serve the needs of the American people,” Omarova said in a statement obtained by Blockworks. </blockquote>



In her writings, Omarova has said she is in favor of restructuring the Federal Reserve. She has also called for the central bank to provide citizens with bank accounts, solving an issue that crypto advocates have long said that blockchain technology would accomplish.&nbsp;



These plans are part of her “blueprint for radically reshaping the basic architecture and dynamics of modern finance,” she wrote.&nbsp;



Omarova has also said that consumer deposits should be moved into digital-dollar accounts at the Fed, hinting at the need for a central bank-backed digital currency.&nbsp;



“The success of Bitcoin paved the road for the subsequent emergence of numerous crypto-assets purporting to challenge the supremacy of sovereign money,” she wrote. “Recent growth of ‘stablecoins’&#8230; presents a particularly tangible challenge in this respect. Not surprisingly, Facebook’s plans to launch its own stablecoin, Libra, immediately heightened the salience of CBDC on central banks’ agenda.”



If confirmed, Omarova will be the first woman and the first nonwhite person to lead the OCC. The Biden administration has been looking to fill the position for the past month and will have to receive Senate approval for the nomination.&nbsp;



“Her experience as a policymaker, in the private sector, and in academia will allow her to work with stakeholders across our financial system to ensure the economy works for everyone, and to protect our economic recovery from the risky activities of Wall Street and other bad actors,” said US Sen. Sherrod Brown (D-OH), Chairman of the U.S. Senate Committee on Banking, Housing, and Urban Affairs, in a statement.



<hr class="wp-block-separator"/>



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<hr class="wp-block-separator"/>

Biden’s Bank Regulator Pick is Critic of Big Banks and Crypto

<div id="highlights-block_612ff4cb51e05" class="highlights">
 <ul>
 <li>Two bills are currently in play: a $3.5 trillion reconciliation bill and a $1.2 trillion infrastructure bill</li>
 <li>The budget bill is currently going through a reconciliation process, a rare parliamentary procedure that makes it filibuster proof</li>
 </ul>
 
</div>



<a href="https://www.rollcall.com/2021/08/30/treasury-pushes-global-crypto-data-sharing-rules-in-budget-bill/" target="_blank" rel="noreferrer noopener">Reports say</a> that the White House is looking to create a framework to force US-based crypto exchanges to share information about non-US users in order to entice foreign registered crypto exchanges to share information on US-users. 



A similar scheme already exists in the tradfi world called the <a href="https://www.oecd.org/tax/automatic-exchange/common-reporting-standard/" target="_blank" rel="noreferrer noopener">Common Reporting Standard</a>. This obliges banks in G20 member countries to collect information on foreign account holders and pass it back to tax authorities in that person’s home country. In the crypto world, US officials believe Americans are hiding their crypto gains on offshore exchanges and would like this information from the host countries and in exchange will give up information on foreign accounts operating at US exchanges. 



Language that would allow for this type of reporting is currently not present in the $3.5 trillion budget framework that is being presented as a reconciliation bill, but the White House is pushing to add it.



A reconciliation bill is a rare parliamentary procedure that makes legislation filibuster proof by allowing for it to pass with only a majority. However, this can only be used for bills pertaining to taxes, spending and the debt limit with a limit of twice in a year.&nbsp;&nbsp;



All this is in contrast to the $1.2 trillion infrastructure bill which contained <a href="https://cms.blockworks.co/is-congresss-infrastructure-deal-a-threat-to-the-us-crypto-industry/" target="_blank" rel="noreferrer noopener">tax reporting requirements</a> that blockchain industry stakeholders said were “impossible-to-fulfill.” The Senate <a href="https://cms.blockworks.co/senate-fails-to-amend-crypto-tax-provision-in-infrastructure-bill/" target="_blank" rel="noreferrer noopener">failed to pass an amendment</a> that would narrow the scope of the blockchain component of the bill.



“At this point, given procedures agreed-upon in the Senate and House, it’s highly unlikely we’ll see changes to the digital asset payfor in the infrastructure bill.” Jackson Mueller, director of policy and government relations at Securrency, told Blockworks in an interview. “The big question is what, if any measures, will be included, and whether the legislative language will generate as much, if not more, uncertainty as to which entities and accounts are included in the IRS’ tax orbit compared to the controversy generated over the digital asset payfor in the infrastructure bill.”



Mueller expected some sort of tax compliance measures to be coming down the legislative pipe, but is not a fan surprise legislative add-ons.&nbsp;



“What stakeholders received from the infrastructure bill — and what they could receive, yet again, in the budget reconciliation package — is the last-minute insertion of additional tax compliance measures without providing the American public with the opportunity to respond,” Mueller said. “No matter your thoughts on what tax treatments should be applied to the crypto industry, this rushed, back-stage process is simply bad policy.”



 The price of bitcoin doesn’t seem to be impacted by the coming proposed tax changes, and is currently up 2.7% during the past 24 hours according to <a href="https://www.coingecko.com/en/coins/bitcoin" target="_blank" rel="noreferrer noopener">CoinGecko</a>.



Want more investor-focused content on digital assets? <a target="_blank" href="https://cms.blockworks.co/events/digital-asset-summit-2021-2/" rel="noreferrer noopener">Join us</a> September 13th and 14th for the Digital Asset Summit (DAS) in NYC. Use code ARTICLE for $75 off your ticket. <a target="_blank" href="https://cms.blockworks.co/events/digital-asset-summit-2021-2/" rel="noreferrer noopener">Buy it now</a>.

Biden Administration Pushing for Foreign Tax Reporting in Reconciliation Budget Bill

<div id="highlights-block_60bfb3d4d4b93" class="highlights">
 <ul>
 <li>Bitcoin is largest holding in Tim Wu’s financial portfolio, representing between 25% and 43% of his assets</li>
 <li>Once a critic of big tech platforms, Wu predicted in 2017 that bitcoin ‘would crash again’ but that the currency ‘feels tested’</li>
 </ul>
 
</div>



President Biden’s special assistant for technology and competition policy reportedly owns between $1 million and $5 million in bitcoin and at least $100,000 in filecoin.



Tim Wu <a href="https://www.whitehouse.gov/briefing-room/statements-releases/2021/03/05/white-house-announces-additional-policy-staff/" target="_blank" rel="noreferrer noopener">joined the Biden administration</a>’s National Economic Council in March. His investment in bitcoin is the largest holding in his portfolio, amounting to between 25% and 43% of his assets, according to a personal financial disclosure obtained by Politico.



A White House spokesperson told Politico in a statement that Wu has not worked on matters involving cryptocurrency and is recused from any because of his financial interest.



The price of bitcoin <a href="https://cms.blockworks.co/bitcoin-extends-sell-off-falls-over-10/" target="_blank" rel="noreferrer noopener">dipped</a> about 11% on Tuesday to below $32,000. Filecoin is an open-source cloud storage marketplace, protocol and cryptocurrency that was released in 2014. It’s currently trading at  $73.18 according to <a href="https://www.coingecko.com/en/coins/filecoin" target="_blank" rel="noreferrer noopener">CoinGecko</a>.



<h3 class="wp-block-heading">The bitcoin bubble</h3>



Wu wrote in an <a href="https://www.nytimes.com/2017/12/18/opinion/bitcoin-boom-technology-trust.html" target="_blank" rel="noreferrer noopener">opinion piece for the New York Times</a> in 2017 that bitcoin was “in a bubble,” noting that it had grown in value from about 39 cents to more than $18,000 in the eight-year span since it launched. The move reflects a transfer of social trust away from government-backed institutions to systems reliant on well-tested computer code, he said at the time.



“Bitcoin may be in a bubble, but not all bubbles are created equal,” he wrote in 2017. “Some are shimmering nothings, reflecting little more than an underlying pyramid scheme. But others are like ocean swells that could become enormous waves. Consider the tech stocks of the late 1990s — a bubble, to be sure, but in retrospect, was Amazon really overvalued?”



Though he added that Bitcoin might never serve well as a general way of buying things due to&nbsp; its fluctuations, Wu noted that it could function as a store of value that a person can sell.



“Sure, Bitcoin will crash again, but over its lifetime, it has already withstood multiple crashes, runs and splits,” he wrote. “It actually feels tested.”



Wu did not immediately return Blockworks’ request for comment about the investments.



<h3 class="wp-block-heading">A fresh start</h3>



The White House adviser is currently on leave from his job as a professor at Columbia Law School, a role he has held since 2006. Wu has led an American antitrust resurgence in recent years by focusing on the growing power of the big tech platforms, <a href="https://www.law.columbia.edu/faculty/timothy-wu" target="_blank" rel="noreferrer noopener">according to his Columbia bio</a>. His tech breakup proposals formed a significant part of the 2020 presidential debate, it notes.



Wu was previously enforcement counsel in the New York Attorney General’s Office and worked on competition policy for the National Economic Council under President Barack Obama. He also worked in antitrust enforcement at the Federal Trade Commission.&nbsp;



The news of Wu’s cryptocurrency ownership comes after former President Donald Trump told the Fox Business Network on Monday that bitcoin “seems like a scam.”



SEC Commissioner Hester Peirce said <a href="https://cms.blockworks.co/a-biden-administration-is-a-good-time-for-a-fresh-start-on-crypto/" target="_blank" rel="noreferrer noopener">during a Blockworks webinar earlier this year</a> that a new White House administration would provide a “good time for a fresh start” on how regulators approach digital assets. A frequent dissenter to SEC rulings that<a href="https://www.sec.gov/news/public-statement/peirce-dissenting-statement-34-88284" target="_blank" rel="noreferrer noopener"> block bitcoin-related funds from entering the market</a>, Peirce highlighted incoming SEC chair <a href="https://mitsloan.mit.edu/faculty/directory/gary-gensler" target="_blank" rel="noreferrer noopener">Gary Gensler</a>’s experience in the crypto industry.



The US Senate Banking, Housing and Urban Affairs Subcommittee on Economic Policy <a href="https://www.banking.senate.gov/hearings/building-a-stronger-financial-system-opportunities-of-a-central-bank-digital-currency" target="_blank" rel="noreferrer noopener">has a hearing scheduled</a> for June 9 to discuss opportunities of a central bank digital currency.

white house