As many of you know, the price of Bitcoin has sky-rocketed over the past couple of months. It has jumped from around $970 in March, all the way up to close to $3,000 just a few days ago. 300% return in just about 3-months time is considered tremendous for any investment market or vehicle. With the bull also comes the bear though, and yesterday we basically saw the entire cryptocurrency market drastically fall. Bitcoin fell to a low of $2,103 at one point in trading this morning, nearly $900 off its high just a few days ago.
While some people are claiming that this is merely a correction in the market, and it was bound to do so at some point in time, I believe it has more to do with the spreading of a false or overhyped narrative on Reddit, Twitter and other social media platforms.
Basically a bill has been introduced by Senators Chuck Grassley (R), Dianne Feinstein (D), John Cornyn (R), and Sheldon Whitehouse (D), calls for improved prohibitions on money laundering. This bill has gone viral of sorts within the Bitcoin and cryptocurrency online circles, especially via a specific Reddit post. entitled “US CONGRESS GOING FULL 1984 ON BITCOIN AND ASSETS”. The poster, who goes by the moniker KlugReeOlympic suggests:
“Their bill wants to pull any business which ‘issues’ cryptocurrency under the anti-money laundering regulatory umbrella.
Here’s where these people demonstrate that they have no idea what they’re talking about.
No one ‘issues’ Bitcoin. There’s no Bitcoin central bank. There’s no Chairman of Bitcoin who decides on a whim to increase the supply.
Bitcoin is created automatically amounts that are predetermined by its code. It’s software.
So the Senate is essentially trying to force the Bitcoin core software to comply with money laundering regulations.
The bill also attempts to drop a major bomb on Bitcoin by including it in the list of monetary instruments that must be reported when entering or leaving the US.”
After reading through the entire bill myself, I must say that this Reddit post, which can probably be traced back to starting the entire rumor that the government is targeting Bitcoin, is rather inaccurate in its relation to cryptocurrencies. For starters, the bill does not mention the term “cryptocurrency” and does not name “Bitcoin” or any other cryptocurrency specifically. What it does mention is “prepaid access devices,” and “digital currency”.
Cryptocurrencies are in fact deemed to be a “digital currency”, but the bill which amends Section 5312(a) of title 31, United States Code, simply calls for adding these terms to the definition of “financial institution”.
So what impact does this have on cryptocurrencies, if the bill actually passes? (Keep in mind that only between 4-10% of bills actually are enacted into law).
The way I see it, is that this bill would have absolutely no impact on cryptocurrencies such as Bitcoin. The reason being is that while digital currencies such as Paypal can be considered financial institutions due to the fact that these companies are centralized, cryptocurrencies can not. Other digital currencies such as Liberty Reserve and E-Gold have been shut down by the government in the past, but keep in mind that these were centralized and unregistered money transmitting businesses. Bitcoin and other cryptos have no central location and are not in and of themselves money transferring businesses. There is no individual who runs the currency as a business, and there are no entities behind the currency. Cryptocurrencies are simply decentralized in every sense of the word. There is no single entity which the government could target as being the “financial institution” for any criminal charges.
The entire point of this bill is to introduce more modern forms of currency into anti-money laundering laws. Someone simply dealing with Bitcoin can not be held liable, just like the government did not charge any individuals who dealt with Liberty Reserve or E-Gold with crimes simply for using the digital currency, even though they shut down the digital currencies themselves. Bitcoin can not be shut down, because there is no way of doing this.
All in all, Bitcoin and other decentralized cryptocurrencies such as Ethereum are safe, even if this bill is miraculously passed in the House and Senate. Those who could face scrutiny under this law would be businesses and individuals who issue Ethereum based tokens as investment vehicles into their businesses. We have seen more and more of these “tokens” being issued over the past year, and undoubtedly there will need to be some regulations put in place in order to ensure that investors remain safe.
Unless you are using Bitcoin for illegal purposes, you have nothing to worry about. Now might just be the perfect time to invest in Bitcoin if you haven’t already, as this false narrative has seemingly driven the price to levels we may never see again.
(Note: I, myself hold Bitcoin and other cryptocurrencies, and this article is my opinion only)