U.S. Senate Vote in Favor of Amendment That Threatens Crypto Industry

I've been following this discussion in Washington and on Hacker News. I'm moderately anti-crypto--I don't buy the pitch but am open to being wrong and believe folks should be free to do what they want with it.

I've also been struck by the proliferation of bank-like services without bank-like obligations. This stretches from fractional-reserve and maturity-transforming services like Tether to exchanges/dealers like Binance and ersatz money transmitters like BitPay.

We need AML (edit: anti-money laundering) and tax reporting at those nexuses. If the answer is there should be no AML, KYC (edit: know-your-customer rules) and/or reporting by cryptocurrency companies, we have no common ground on this argument. To date, this is what I have most-commonly heard. If that's what the Senate is hearing, it's unsurprising they consider the debate closed. If the argument is a reasonable tweak to who has to report, or what or the form in which it must be reported, policy makers are listening. (Wyden's amendment is a result of reasonable concerns expressed by miners.)

What? You expected the U.S. Government to not go after maintaining the levers it needs to project power through economic control of who is allowed to transact what?

Do you also hate that cryptography is shortened to crypto?

Blegh. I think that cryptocurrency was a well-intentioned experiment trying to solve real problems, but that it has broadly failed, and that some of the knock-on effects of speculation on top of the cryptocurrency ecosystem are just unambiguously harmful at this point.

It's not just the environmental concerns from PoW; I have concerns about privacy, about how coins have derailed (in my mind) more legitimate efforts to improve modern financial systems. And I have cultural concerns about how this plays into some of the worst instincts of modern society towards speculation and artificial scarcity purely for their own sake, disconnected from any problems or utility. NFTs are the type of technology that honestly shouldn't have been developed, they're pointless and exploitative.

But as much as I do kind of want cryptocurrency to crash and die, I really don't want to do it this way. I've seen some people argue that this wouldn't apply to software developers, but I don't like that the question is under debate at all. The idea that it theoretically might is terrifying, if it's not intended to apply to developers why wouldn't we clarify that in the bill to assuage those fears? And even where miners are concerned: I would like to see mining (particularly PoW mining) eventually become unprofitable, but pushing those people into the category of brokers seems really problematic and short-sighted.

My worry is both that this will open the door to a lot more unnecessary data collection, and that further down the road it might hinder efforts to make better alternatives to the current cryptocurrency industry. The financial concerns are real, but the really troubling part to me is the reporting requirement. Software developers shouldn't be collecting this kind of information, neither should miners.

I also haven't seen a lot of consensus about what technologies the label "digital asset" could apply to in the future, and that worries me a lot as well. I am not a legal expert, I don't feel qualified at all to speculate on how this stuff is determined. A smaller group of people saying that "obviously X made-up digital token or point system or game item wouldn't count" -- that's not super-reassuring to me because I'm not smart enough to evaluate the accuracy of their claims. I want to see more qualified legal experts weigh in. I don't want to see games suddenly collecting a lot of personal information just because technically someone could sell a digital item to another player for money.

I like Wyden's amendment: it still goes after brokers, but it makes it clear who a broker is (and importantly, isn't). And I thought that there was pretty decent bipartisan support for Wyden's amendment. It's really frustrating that support seemed to only be good enough to get 29 votes.