Congressman Brad Sherman wants to “outlaw” cryptocurrencies in the United States.
He believes that the purpose of these digital currencies “is to solely aid in the disempowerment of the United States and the rule of law.” These comments were part of a broader statement made while trying to “look for colleagues to join me [him] in introducing a bill to outlaw cryptocurrencies…purchases by American citizens so we nip this in the bud.”
The material parts of his statement read:
“An awful lot of our international power comes from the fact that the dollar is the standard unit of international finance and transactions. Clearing through the New York Fed is critical for major oil and other transactions and it is the announced purpose of the supporters of cryptocurrencies to take that power away from us. To put us in a position where the most significant sanctions we have on Iran for example, would become irrelevant. So whether it is to disempower our foreign policy, our tax collection enforcement, or our traditional law enforcement…the purpose of cryptocurrency…the advantage it has over sovereign currency is to solely aid in the disempowerment of the United States and the rule of law.”
While many people will claim Brad Sherman doesn’t know what he is talking about, I would argue that his statement highlights that the Congressman knows exactly what is happening. He sees the increased probability that we are moving to a world where non-sovereign currencies are the default and it sounds like he is scared.
Mr. Sherman realizes that the United States, and other countries with major currencies, will lose considerable power if they are no longer in control. While his understanding of the technology’s potential is accurate, it appears that the Congressman does not understand the improbability of being able to ban ownership of these decentralized digital currencies. The laws could be created but they would be nearly impossible to enforce.
Before we get into the repercussions of Mr. Sherman’s statements, I want to review why a sitting Congressman would want to outlaw the little $192 billion cryptocurrency market?
Easy. Lets follow the money :)
Mr. Sherman is a career politician. He has served as a California Congressman for the last 22 years. His largest political donors are financial services companies.
Included in Mr. Sherman’s top five donors is Allied Wallet — a payment processor for credit cards and e-commerce merchants. Without digging too much, it is easy to see that Brad Sherman’s top donors are likely to be the first companies disrupted when Bitcoin and cryptocurrencies are successfully adopted on a global scale.
Additionally, Congressman Sherman is worried that global superpowers will have no response to Bitcoin’s decentralized, immutable, non-censorable, and non-seizable advantages. He quite literally states that cryptocurrencies have an advantage over sovereign currencies (which is the first time a politician has admitted this publicly I believe).
So what does all this mean?
In my opinion, this is an incredibly bullish development for Bitcoin. There are few better advertisements for the digital currency than a current politician screaming about how unfair it is that Bitcoin is better than the US dollar. Rather than hurting the Bitcoin enthusiasts argument, Mr. Sherman is actually confirming it’s validity.
The best part though is that politicians aren’t only going to be arguing with random “crypto enthusiasts” for long. They will very quickly have to defend their calls to outlaw cryptocurrencies against the Facebooks and JP Morgans of the world, who are already building their own versions of these digital currencies.
If Congressman Sherman is upset that Bitcoin could hurt the prospects of the US dollar, wait until he finds out that Facebook has the possibility of becoming a digital central bank to 2+ billion people around the world. Simply, the genie is out of the bottle and fiat currencies backed by sovereign nations are in deep trouble.
To be clear, I don’t believe that the US dollar is going anywhere in the short-to-medium term. This type of disruption won’t happen overnight. But don’t be surprised if the US dollar is significantly weakened over the next 15-20 years by a number of developments.
Some of these could include:
Other superpowers like Russia and/or China embracing Bitcoin and cryptocurrencies, which would force the US to also embrace them or be left behind.
A coordinated move by numerous nation states and private companies to move away from pricing oil in US dollars and instead pricing the commodity in Bitcoin.
Facebook, JP Morgan, and other private companies getting hundreds of millions of people to adopt their digital currency as the currency of choice on a daily basis.
The continued mismanagement of monetary policy by the bottom 50% of countries, leading to hyperinflation and currency blowups, which would eventually lead to a significant number of the world’s population adopting Bitcoin as their reserve currency.
The United States creating a self-inflicted wound by adopting Modern Monetary Theory, which allows for abnormally large increases in printing of money and the eventual hyperinflation of the US dollar.
The future is impossible to predict, but I have never been more bullish on the prospects of Bitcoin. One of the most powerful people in the world, a sitting United States Congressman, called for the outlawing of the digital currency and instead of seeing a negative market reaction, Bitcoin’s price continued to drive higher and higher over the last 24 hours.
If the United States bans Bitcoin, it will actually lead to more adoption, not less. People don’t like being told what to do with their wealth and it is obvious to anyone who takes the time to learn — Bitcoin is better than fiat currencies.
-Pomp
The “Off The Chain” podcast has been downloaded 1,000,000+ times in 160 countries. You can listen to the latest episode with Patrick O’Kain, Special Agent at the DEA here: Click here for Off The Chain podcast
THE RUNDOWN:
Beleaguered Bitfinex Says Its Crypto Exchange Turns 97% Profit: Bitfinex is giving potential investors a peek into just how lucrative it can be to operate a cryptocurrency exchange. The controversial digital-asset trading platform disclosed in a so-called white paper that IFinex Inc., the company’s closely held parent, had a net profit of $404 million last year on $418.2 million in gross profit that includes consolidated revenue. Bitfinex disclosed the tidbit as it seeks to raise up to $1 billion in an initial exchange offering from non-U.S. investors after allegedly losing as much to a banking provider. Read more.
Ethereum Co-Founder Says Tether, Bitfinex Mess Won't Get Better: The turmoil surrounding Tether and Bitfinex isn’t likely to subside, said Joseph Lubin, a co-founder of Ethereum and founder of ConsenSys. “It seems like a really big mess that probably won’t get better,” said Lubin during an interview at the sidelines of the Fluidity Summit conference in Brooklyn, New York. “Tether is somewhat important to our ecosystem because it’s used by different institutions to effect more fluid trading. There are other price-stable tokens out there -- many others -- and I think they’re going to gain traction because of this. I think that will be a really good thing.” Read more.
SocGen Introduces Crypto to a $2 Trillion Market: A bond market as old as capitalism itself has emerged as the latest proving ground for cryptocurrencies. A unit of Societe Generale SA sold 100 million euros ($112 million) of covered bonds -- debt backed by mortgages -- in the form of digital tokens with the French bank as the only buyer. The idea of last month’s pilot issue conceived by what the bank called an internal startup was to test how the technology behind virtual currencies can be used to cut costs and speed settlement for the securities. Read more.
Crypto Exchange Binance Says It’s Revamping Security in Post-Hack Update: Cryptocurrency exchange Binance said it is revamping security measures after losing some 7,000 bitcoin worth over $40 million in a hack earlier this week. “Significant” changes related to its application programming interface (API), two-factor authentication (2FA) and withdrawal validation are being made, Binance CEO Changpeng Zhao said in a blog post published on Friday. The exchange did not disclose more details regarding these efforts, but said it is also improving its risk management and know-your-customer procedures to fight phishing, among other additional security measures at the back-end. Read more.
SEC Commissioner Fears ‘Heel-Dragging’ Will Stifle Crypto Innovation: Hester M. Peirce, a member of the Securities and Exchange Commission, is worried that the regulator is moving too slowly for the crypto ecosystem. Addressing fellow regulators at the Securities Enforcement Forum in Palo Alto, California (the heart of Silicon Valley) on Monday, Peirce said that one year ago she was concerned that the SEC “as one of [the token market’s] potential regulators, would stifle its growth.” She added: “I will admit today that I was very wrong, not about whether the SEC would stifle the industry’s growth—it has—but in how it would do it.” Read more.
Interested in crypto research? Look no further. The premier research firm in the space, Delphi Digital, has two subscription offerings for individuals and institutions alike. Take a look at their Bitcoin and Ethereum reports to get a taste of their analysis. [Click here]
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