The cryptocurrency business wants to convince the Biden administration it does more than “finance criminal enterprises.”
Kristin Smith, executive director of the Blockchain Association, a leading trade association in the blockchain and cryptocurrency industry, tells FOX Business the group is mounting a charm offensive with key members of the Biden Administration as potential new regulation looms.
Smith said the group has been meeting with staffers in the Treasury Department and is in the middle of scheduling meetings with Secretary Janet Yellen and nominated Deputy Secretary Wally Adeyemo — the point man on crypto and technology matters.
“Our number one priority is helping Yellen understand crypto goes beyond the financing of criminal enterprises,” Smith tells FOX Business. “We want her to understand the value of crypto networks.”
A Treasury spokesperson did not respond to a request for comment.
Cryptocurrencies like Bitcoin are a type of digital currency used to make transactions outside the normal banking system and through a decentralized network known as the blockchain.
Crypto promoters say the currency is impossible to counterfeit, and blockchain technology allows transactions to be completed seamlessly and without the costly checks and processing done in the traditional banking system.
Once a novel idea, in recent months, cryptocurrencies have gained some mainstream acceptance. Tesla, the electronic automobile company, plans to accept Bitcoin as payment. As it gains a wider acceptance, Bitcoin has surged more than 480% in value over the past year—at points trading as high as $50,000.
Yet even as this digital money trend continues to gain wider appeal, cryptocurrencies have also faced criticism. Many analysts and policymakers question its usefulness for the general public. Unlike the dollar, which is backed by the full faith and credit of the federal government—Bitcoin isn’t back by anything tangible. Its inherent value is impossible to determine, and since it’s outside the banking system, the blockchain is riddled with fraud and is often used to pay for illegal activities such as drug deals, some critics say.
Yellen, for her part, has called the “misuse” of crypto a “growing problem.” At a recent New York Times Dealbook conference she said Bitcoin is an “extremely inefficient way of conducting transactions” and that “to the extent, it is used I fear it’s often for illicit finance.”
As a result, crypto leaders are looking to head off new regulations by the Biden administration. As FOX Business previously reported, crypto leaders are looking to put together a consortium of investors, CEOs, and advisers to regularly meet with key administration officials to fend off possible regulation that could stifle growth in the industry.
Said Smith, “We’re hoping to speak to Yellen or Adeyamo in a few weeks.”
Digital currency leaders believe many of the regulations being discussed at Treasury would hamper growth by holding nascent crypto companies to standards that can only be met by more established banks.
One regulation raising alarm bells for crypto insiders is the so-called “Travel Rule,” which requires all financial institutions to abide by the Bank Secrecy Act and comply with various rules record-keeping procedures.
This rule was put in place to ensure banks aren’t facilitating money laundering and are monitoring transfers they’re making. But crypto officials believe that smaller transactions between so-called digital wallets should be exempted.
These executives note larger crypto companies like Coinbase already monitor transactions for fraud but newer apps that function as “digital wallets” by holding $5, $10, or $20 for individuals shouldn’t be held to those same standards.
“We’re trying to work as high up the Treasury food chain as we can,” Adam Traidman, CEO and co-founder of popular crypto app BRD tells FOX Business. “We’re not opposed to regulation and compliance, but we need time to spur innovation and grease the skids for adoption of crypto first.”
The moratorium on regulation, which crypto leaders are pushing for, isn’t a wholly new concept. Section 230 of the Communications Decency Act, protects tech companies like Facebook and Twitter from being sued for content that users post on their platform. The law was implemented in the 1990s to help nascent tech companies grow and compete with more established competitors.
“One of our main goals is to carve out crypto to crypto transactions from most regulations,” Traidman adds. “If crypto transfers have to meet wire transfer rules, that will harm the industry.”