Blockchain cloud infrastructure service provider W3BCloud is set to go public via a Special Purpose Acquisition Company (SPAC) dubbed the Social Leverage Acquisition Corp I (SLAC).
According to the transaction document, the SLAC vehicle is being sponsored by Social Leverage, a leading early-stage VC. The proposed funds to be raised via the SPAC are pegged at about $100 million.
Going public through a special purpose acquisition company is an alternative route designed for startups looking to raise funds and trade on public bourses.
They are generally a faster-track option for promising startups, provided they have a matching business design with their sponsoring SPACs. Per the proposed merger deal, W3BCloud is on track to be listed on the New York Stock Exchange (NYSE).
W3BCloud is one of the promising startups that hope to be the go-to cloud infrastructure provider for the emerging Web3.0 ecosystems. Currently, the startup ticks the box for providing a quality supply chain and access delivery through its integration of AMD technology. The startup’s core partnership also extends to ConsenSys, which gives it software and protocol insights.
Over the years, the development of Web3.0 focused on cloud infrastructure providers has progressed in a limiting way. This is because crypto-based startups hardly patronize these decentralized cloud providers as preference remains largely for centralized services like Microsoft Azure and Amazon Web Services (AWS).
W3BCloud aims to change the narrative, and it is developing the right data centres, most of which are in the United States. The firm is exploring avenues to bolster its infrastructure with the funds raised and the remaining $345 million cash it has in its trust.
W3BCloud is riding on the strength of both its founders and the expertise of the veterans from Social Leverage. With the clamour for Web3.0 soaring remarkably this period, W3BCloud is hopeful it has a large market potential for its products.
A bipartisan group of members from the U.S. House of Representatives called on Treasury Secretary Janet Yellen to clarify the language in the infrastructure bill signed into law in November around the definition of “broker”.
In a Wednesday letter, House Financial Services Committee ranking member Patrick McHenry and ten other representatives urged Yellen to reference the Keep Innovation in America Act to “ensure that any future guidance” in the November infrastructure bill would provide “the necessary clarity to the digital asset ecosystem.” In addition to the reporting requirements, the lawmakers said that the Treasury Department should narrow the scope of the information a broker can capture, as it would risk “the creation of an unlevel playing field for transactions in digital assets and those required to provide them.”
RM @PatrickMcHenry, @RepTimRyan, and colleagues sent a letter to @SecYellen ahead of the expected guidance on new digital asset reporting requirements.
They urge her to provide additional clarity to America’s innovators and entrepreneurs.
Read more https://t.co/JquRbvVds9 pic.twitter.com/9hXZytbSkX
— Financial Services GOP (@FinancialCmte) January 27, 2022
According to the House members, the current wording of the law would potentially allow the Treasury to interpret which companies and individuals in the crypto space qualify as a “broker,” creating a burden of reporting information to the government they may not necessarily have. This would seemingly require miners, software developers, transaction validators and node operators to report most digital asset transactions worth more than $10,000 to the Internal Revenue Service.
“As nascent financial technologies develop, we must ensure requirements imposed on the digital asset ecosystem are both crafted and implemented in such a way to ensure the United States remains at the forefront of financial innovation,” said the letter to Yellen. “We believe consistent information reporting on digital asset transactions is necessary. However, it should not prevent these technologies and the ecosystem from continuing to flourish due to unclear regulations that only create uncertainty.”
Related:US Congressman calls for ‘broad, bipartisan consensus’ on important issues of digital asset policy
The appeal to the U.S. Treasury Secretary mirrors that of an December letter from six senators claiming the infrastructure law contains a “overly-broad interpretation” of what a broker is, and requesting Yellen provide guidance to correct the perceived error. Senators Rob Portman, Cynthia Lummis, Mike Crapo, Pat Toomey, Mark Warner and Kyrsten Sinema urged Yellen to provide a set of rules clarifying the wording “in an expeditious manner.” Lummis and Senator Ron Wyden also attempted to pass legislation that would have changed the tax reporting requirements to “not apply to individuals developing blockchain technology and wallets” on Nov. 15 when the bill was signed into law by President Biden.
To date, none of the proposed measures clarifying the wording in the law have gotten enough support to enact change. Many lawmakers and crypto advocacy groups have expressed concerns that if the law is implemented as is, it could threaten the United States’ position as a nation encouraging the development of innovative technology.
“Our innovators and entrepreneurs can’t wait,” said McHenry. “Secretary Yellen must provide much-needed clarity so this nascent industry can flourish here in the U.S.”
Turkish President Recep Tayyip Erdoğan said, “We are in a war against cryptocurrencies,” on September 18, 2021. Merriam-Webster defines war as “a state or period of fighting between countries or groups.” I am guessing that the war Erdoğan mentions here is a war between Erdoğan’s tribe and Bitcoin, as the citizens of the country are embracing bitcoin more than ever. On January 15, 2021, the number of people investing in the Turkish Stock Market went past 2 million for the first time. By April 24, 2021, there were more than 5 million users registered to the two biggest Turkish bitcoin exchanges. One would wonder how a 12-year-old technology manages to attract more people than the Istanbul Stock Exchange that has been active since 1985 with the full support of government institutes. The answer lies in the Turkish lira and the reputation of the central banking system of Turkey.
The Tribe
The Turkish Central Bank is identified as an independent bank. Unfortunately, the bank’s independence is very questionable. Turkish President Erdoğan appears to be acting as a chairman in disguise for the bank. The central bank had a total of 21 chairs between 1931 and 2019. This gives the chairs an average time of 4.2 years per person. Murat Uysal was appointed as the chair in July 2019. Uysal was sacked from duty in November 2020 and Naci Ağbal was appointed instead of him. Ağbal held his position until March 2021 and that position was filled by Şahap Kavcıoğlu. In the last 26 months, the bank had three different chairmen.
Central Bank of Turkey Presidents since its inception.
Image source
The reason why Erdoğan is interfering with the bank is that he wants to artificially lower the interest rates to open credit windows for Cantillonaires, mainly for the ones that are in the construction industry. Inflation data is used to calculate interest rates. If the interest rate for the Turkish lira is lower than the inflation rate, nobody will park their money in the form of the Turkish lira and people will choose alternative assets like gold, dollars, bitcoin and real estate. As the demand for the Turkish lira diminishes, its value also diminishes, causing more inflation since Turkey is a country with a net trade deficit and is dependent on exports priced in foreign currencies. Simply speaking, decreasing interest rates lowers the Turkish lira’s value, causing inflation, and inflation results in a need for hiking interest rates again.
Another logic defying cut in interest rates as of September 23, 2021 (Source).
With the results above, one would wonder why the president forces the central bank to lower interest rates? The answer is more complicated than it seems to be. It lies in creating cheap credit for the construction companies, aka the Tribe I have mentioned at the beginning of this writing. Something similar to what happened in China with construction has been happening in Turkey. China’s growth was fueled by its growth in the construction industry. There were a lot of projects going on simultaneously and the demand was always there. This is a video from 2016 explaining the Chinese ghost cities:
Beijing, at some point, tried to slow down the construction bubble by putting a limit of one property per married couple. People divorced on paper and kept living together in order to own two separate properties. One of the other reasons for this construction bubble in China was that a stream of construction was in favor of the local governments. They would issue permits and get paid in return. Beijing and Chinese leadership were aware of this unnatural supply and demand and they also intervened to prevent shadow banking and the creation of money via credits.
Unlike Beijing, the Turkish government actually tries to keep the construction bubble inflated. In June 2020, the government banks HalkBank, Ziraat Bank and VakıfBank were instructed to lower their interest rates for mortgage loans for new apartments to 0.64% per month — 7.68% per year — and add a period of no payment for the first 12 months. During that time. anyone would be able to get 10% interest paid for their capital in their savings account. So, the banks were pushed to give out cheap credit at 7.68% during a time in which they were paying their customers 10% interest rates. This was a direct incentive for people to buy new property. Government incentivizing home sales comes with its problems. The artificially pushed demand ends up increasing house prices significantly and destroys the price equilibrium of the market. All these efforts moved the market, but the number of homes that never had an owner in Turkey still rose to 1,543,225 in the first quarter of 2021 from 1,464,331 in 2020. This is a huge stockpile of property waiting to be sold. For reference, in November 2020, 268,385 homes in England had been empty for at least six months.
Housing stock between 2013–2021, first quarter.
Why Construction (Small Fish)?
Construction is rather easy money, especially if you are given special treatments. Let’s say two people have adjacent land of 1,000 m² with the same construction conditions that are each valued at $4 million (construction up to 50% of the land and a maximum of seven stories of construction is allowed in the region). Let’s say Person A builds a housing complex with a base of 500 m², four houses of 125 m² per floor and seven floors with a total of 28 homes. Person A sells each house for $1,000,000 for a total of $28 million. The minimum wage is cheap in Turkey ($325 per month) and construction costs are minimal compared to a lot of other places. Let’s assume that the construction of these apartment blocks costs $7 million. Including the land, Person A needs to sell 40% of the apartments to break even.
Person B then goes to the municipality and asks for an extension on the construction permit.
It is important to remember that nothing in life comes for free. Person B makes a generous — and unregistered — donation to the municipality. In return, he gets to build on 75% of the land and can go up to 14 floors. So, he starts constructing on a 750 m² base gets 6 houses of 125 m² per floor and gets to build 14 floors which give him 84 homes. Let’s assume the construction part of the project costs him $15 million, the land was $4 million, same as Person A but an additional cost of $2 million for his generous donation. For a total cost of $21 million, Person B can get up to $84 million in return. He now only needs to sell 25% of the houses to break even.
With a significantly improved profit margin, Person B can even sell for less than Person A. Financing these projects is another part and it is where things get spicier. So Person B’s land value increases to around $10 million with the additional construction permits. He can go to the bank, place a mortgage on the land and get around $10 million of credit. Now he has the land and he has $10 million in cash. He starts building the complex, and as soon as he starts building, he starts selling the apartments that help him further finance the complex. In Turkey, some suppliers also get paid with apartments instead of fiat money. Construction steel usually costs around 7% of the total cost of a building. In our case, ($15 million * 0.07) construction steel costs a little over $1 million. He can pay the steel manufacturer maybe $200,000 and an apartment in return as payment. Basically, it is possible to have land, get the land upgraded, a fraction of the initial investment needed and you can build the complex.
There were over 450,000 registered construction contractors in Turkey in 2020. By comparison, there are 3,550 (as of 2020) in Germany and 52,592 (as of 2020) in the U.S. It is clear to see that there is a good incentive attracting people to the construction industry in Turkey. So, as mentioned in the above example, there is some money flow to the municipality. This money helps fund local political groups, political youth groups and, of course, finds its way to the upper levels of the political party of the municipality. This, unfortunately, doesn’t only happen with Erdoğan’s party. However, as Erdoğan’s party has control over different government establishments, they face less resistance moving through bureaucracy. There is a popular saying in Turkey, even said by strong supporters of Erdoğan’s Akparti, “They steal but at least they do get things done.” As long as there are incentives to steal with zero downside, people will steal.
Why Construction (The Big Fish Edition)?
Aside from the local construction projects, the real game is in government construction projects. Government tender laws have changed 191 times in Turkey since 2003. With an average change of 10.6 per year or once in every five weeks, just to follow the government tender law is a full-time job.
Turkey also has a lot of projects which President Erdoğan considers to be “mega” projects. Some of these projects include Istanbul Grand Airport ($12 billion airport project, considered to be the biggest Airport in the world),
Image source
Eurasia Tunnel (a tunnel that goes under the Marmara Sea, connecting European and Asian parts of Istanbul), Marmaray (a railroad that goes under the Marmara Sea connecting Istanbul), Yavuz Sultan Selim Bridge (the third bridge that connects the Bosphorus Strait), Osmangazi Bridge and Çanakkale Bridge. All these mega projects have government-guaranteed usage contracts.
Government-Guaranteed Usage Contracts?
The image below is an image of the Çanakkale Bridge. The last active mega project.
The expected cost of the bridge is $924 million (793 million euros).
Credit terms are 15 years of payment with no payment in the first five years.
45,000 guaranteed vehicle passes (Government pays if the actual number of cars passed is under 45,000 a day).
Payment per pass is roughly $17.48 plus tax (15 euros plus 18% value-added tax or VAT).
The consortium of companies that got the bid will operate the bridge for 16 years.
So, the operators of the bridge are guaranteed to make a revenue (in euros) of 15 x 45,000 = 675,000 euros per day, 246,375,000 per year, and 1,231,875,000 in five years. They will start paying back for their credit of $924 million (793 million euros) after they generate roughly $1.43 billion (1,231,875,000 euros) which is mostly profit.
Image source
The main problem here is the guarantees and the guarantee fees. Osmangazi Bridge, for example, has a daily guarantee of 40,000 vehicles per day. It has been operating since July 1, 2016. The first half of 2021 was the first time they managed to average above 40,000 vehicles per day (42,000 vehicles on average). However, the original contract for the bridge was $35 + 18% VAT. The consortium currently charges the users $17 + 18% VAT and the $18 of difference is subsidized by the government costing an extra $684,000 per day and around $250,000,000 per year.
On top of that, they recently started to build city hospitals. Currently, 13 of them are operating and the Turkish government guarantees to pay 70% of the patient capacity. Last year, 15% of all the Ministry of Health’s budget was spent on the payment of these hospitals. There are eight more under construction and, when completed, the total capacity will increase to 22,221 patients from 17,842. So, if the Ministry of Health gets the same budget upon completion of these hospitals, they will be spending 18.6% of its budget on these hospitals.
The list, unfortunately, goes on and these are huge compounding liabilities for the future. They are all projects that provide good short-term economic data. A lot of people are employed via these projects, they help the country show short-term growth, but they are all long-term debts the citizens will have to pay to the friends of Erdoğan.
Who Are These Friends?
The chart below shows the data for the top-10 companies in the world that received government tenders in dollar terms between the year 1990 and July 2018. Five of these 10 companies are Turkish companies. Limak, Cengiz Holding, Kolin Grup, MGN Holding, and Kalyon Holding made to the list thanks to the Turkish Treasury guaranteed projects.
Image source
In 2020, the Minister of Commerce Ruhsar Pekcan also told the senate that between 2010–2020 these companies had a lot of tax deductions.
In a span of 10 years,
Kolin Grup’s taxes were deducted 36 times.
Cengiz Holding had deductions 30 times.
Kalyon Holding and Limak had 19 tax deductions.
In 2016 alone, Cengiz Holding’s tax liabilities of $148 million that occurred between the fiscal years of 2009–2015 were canceled. Cengiz Holding also had their name listed for tax evasion in the recent Pandora Papers.
What Next?
Erdoğan is pushing forward for another mega project. This time it is called Kanal Istanbul. The project will be handled by the crony companies mentioned above.
The image above is an image of Istanbul. The strait you see on the right side of the map is the Bosphorus. It is a natural strait that connects the Black Sea and the Mediterranean Sea. Erdoğan wants to create a secondary strait that is 45 km long, 275 meters wide, and 20.75 meters deep. They are also planning 11 bridges across this canal and housing to inhabit 500,000 more people. Istanbul is already one of the most crowded cities in the world with a population of over 15.5 million people. The city is already too populated and is on the brink of water shortages. The channel will be built on top of the agricultural land and underground water basins of Istanbul. On top of all these things, Istanbul is located in an earthquake zone. In fact, not too long ago, on August 17, 1999, an earthquake near Istanbul caused the deaths of 17,480 people and damaged 285,000 houses.
The project requires an investment of between $30–40 billion. Turkey does not have the sort of money to finance the project. Some sources say that the financing of the project will be provided by China.
Nevertheless, considering all the above data, someone with a sense of logic would not go for this project. Erdoğan, on the other hand, says that he will complete the project no matter what, even if it’s against the people’s will.
Why So Stubborn About Kanal Istanbul?
The land that the Kanal Istanbul will take place on is already bought by the insiders for very cheap. The project was first announced in 2011. Between 2011–2019, 30 km² of land were traded. To understand how big this land is, Paris sits on an area of 105 km². Some of the landowners there include middle-school friends of president Erdoğan, ex-minister Erdoğan Bayraktar, the Emir of Qatar Sheikh Tamim bin Hamad Thani’s mom, members of Ak Parti (Erdoğan’s party) and Mhp (political party close to Erdoğan), and three companies from Kuwait, U.A.E. and Saudi Arabia own 0.3 km² of the land.
How Does Bitcoin Fix This?
In a world where money is not controlled by someone (the president of Turkey in this case), it is much harder to fund these projects by printing money and diluting people’s savings and earnings. Bitcoin, in this case, would be very beneficial for the majority of Turkish people who want to opt out of this craziness. People would prefer to store their wealth in a sound money that can’t be diluted instead of one printed to support these otherwise zombie companies and government cronies. As mentioned at the beginning of the article, this is a war between Bitcoin — a mathematically backed software that only aims to deliver immutable blocks every 10 minutes — versus a mathematically illiterate tribe that does as many malinvestments as possible to sustain their Ponzi-like business.
This is a guest post by Stackmore.hodl.Sucre. Opinions expressed are entirely their own and do not necessarily reflect those of BTC, Inc. or Bitcoin Magazine.
Leaders in the crypto industry continue to speak up as the bipartisan $1 trillion infrastructure bill, known for implementing tighter rules on crypto businesses and expanding reporting requirements for brokers, passed the United States Senate. Billionaire investor and Bitcoin (BTC) proponent Mark Cuban is one of them.
Speaking to The Washington Post over the weekend, before the bill officially passed the senate, Cuban drew a parallel between the growth of crypto to the rise of e-commerce and the internet in general:
“Shutting off this growth engine would be the equivalent of stopping e-commerce in 1995 because people were afraid of credit card fraud. Or regulating the creation of websites because some people initially thought they were complicated and didn’t understand what they would ever amount to.”
Mark Cuban is a vocal advocate for crypto and decentralized finance. The Dallas Mavericks owner is known for enabling the Mavs to accept Bitcoin, Ether (ETH) and Dogecoin (DOGE) payments for tickets and merchandise items.
He also argued in May that crypto asset prices are increasingly reflective of real utility and demand and that the day will eventually come when crypto is “mature to the point we wondered how we ever lived without.”
Related: Senators introduce pro-crypto amendment to infrastructure bill; industry says it’s not enough
On Tuesday morning, the U.S. Senate passed the controversial bill in a 69–30 vote. The bill’s main focus is roughly $1 trillion in funding for roads, bridges and major infrastructure projects.
However, the bill caused serious concerns among the crypto ecosystem as it would implement tighter rules on crypto businesses, expand reporting requirements for brokers and mandate that digital asset transactions worth more than $10,000 are reported to the Internal Revenue Service (IRS).
Senator Pat Toomey, who was among the lawmakers that have written an amendment to the infrastructure bill to exclude certain crypto companies from the reporting requirements for brokers, said the new legislation imposes “a badly flawed, and in some cases unworkable, cryptocurrency tax reporting mandate that threatens future technological innovation.”
On July 29, Cointelegraph reported that provisions had been hastily added to the infrastructure bill that sought to raise $28 billion through expanded taxation and impose stringent third-party reporting requirements for any entity deemed to comprise a cryptocurrency “broker.”
The provision’s broad language sent shockwaves across the crypto community, with onlookers noting that software developers, hardware wallet providers, and miners and other network validators would likely be classified as brokers and required to report information on counterparty network participants that they are unable to collect.
Taking to Twitter yesterday, Senator Richard Shelby expressed support for the amendment put forward by senators Pat Toomey, Cynthia Lummis, Rob Portman, Mark Warner, Ron Wyden, and Kyrsten Sinema that would have exempted software developers, transaction validators and node operators from the third-party reporting requirements.
Despite his stated support, Shelby asserted he objected to the amendment over his dissatisfaction with the defense spending allocations contained in the legislation.
Richard Shelby, the 87-year-old Republican senator whose sole objection led to the bi-partisan infrastructure bill passing through the Senate without amendment on Aug. 10, has revealed he actually supported changes to the bill’s cryptocurrency provisions that his vote ultimately blocked.
I supported @SenToomey cryptocurrency amdt. I know of its importance to innovation & job creation, but I believe it pales in comparison to the security of our nation–which is why I called for a vote on my defense infrastructure amdt. It’s unfortunate that Dems blocked both amdts.
— Richard Shelby (@SenShelby) August 10, 2021
The crypto community has slammed Shelby for his actions, with the comments to his post nearly exclusively populated with angry outpourings from crypto-natives.
Twitter-user David Zell noted that Shelby’s largest donors from 2015 until 200 were commercial banks and firms representing the securities and investments sector — which donated more than $870,000 to Shelby over the period.
And y’all thought this was about military spending… pic.twitter.com/dWkD1iP0K4
— David Zell (@DavidZell5) August 9, 2021
Jake Chervinsky, general counsel to Compound Finance, also criticized Shelby, highlighting that the Senator is retiring at the end of his term.
Related:‘We’ll be back on this’ — Alabama senator derails crypto amendment with two words
Despite the popular amendment failing to pass the Senate, Chervinsky offered that it is “very unlikely” DeFi developers will be targeted under the infrastructure bill’s original language.
It’s very unlikely that software developers who only write code would be “brokers” under the current definition.
You have to torture the language to make it remotely fit devs, & even then it’d likely violate the First Amendment.
Anyway, I really don’t think devs are the target. https://t.co/rtobFxUlTM
— Jake Chervinsky (@jchervinsky) August 10, 2021
The bill must now pass through the House of Representatives, which is in recess until September 20.
The bitcoin price fell slightly after an amendment clarifying cryptocurrency tax rules in the proposed U.S. infrastructure bill was rejected.
The below is from a recent edition of the Deep Dive, Bitcoin Magazine‘s premium markets newsletter. To be among the first to receive these insights and other on-chain bitcoin market analysis straight to your inbox, subscribe now.
In Friday’s Daily Dive, “Tik Tok, Impending Supply Shock,” we covered the supply and demand dynamics present in the bitcoin market, and stated how bitcoin was in a position to continue to run. While this has begun to play out (BTC/USD at $42,453 at the time of writing), we see this trend as continuing into the future.
“Demand for an absolutely scarce, inelastic monetary asset continues to increase, supply is getting pulled off the market at feverish pace, and price isn’t reacting.
“The market is finally starting to wake up.” –The Daily Dive #037 – “Tik Tok, Impending Supply Shock”
Yesterday, the United States had a congressional hearing on the $1.2 trillion bipartisan infrastructure bill set to pass, with proposed amendments in the bill up for vote.
In particular, participants in the crypto industry were up in arms about the vague language used in the bill that could possibly subject developers and node operators to tax reporting that is quite literally impossible for said entities to report.
For any potential amendment to be made, unanimous consent would be needed, meaning 100 out of 100 senators would have to agree. Heading into the hearing at 3:30 p.m. EST, there was optimism that the Toomey-Lummis-Warner Amendment would be passed.
However, the Republican Senator Richard Shelby of Alabama objected, in what can be described as truly one of the most fiat moments possible.
Senator Shelby objected to the amendment because he was looking to increase the defense budget by $50 billion, and this was not included in the Toomey-Lummis-Warner Amendment.
Bitcoin sold off on the news, just to levels seen over the recent 24 hours, however.
As covered magnificently by Alex Gladstein, ironically enough, the very nature of the fiat monetary system is what subsidizes the military to become so large in the first place, as the true cost does not need to be fully financed solely via taxation, but rather through inflationary monetary policy.
Below is the federal government’s military spending over the 70-plus years:
Source
The ultimate irony is that last-minute regulation being added to a bill in an attempt to hamper a budding industry run by individuals looking to peacefully reclaim their financial sovereignty from the state, only for amendments made to the initial proposal to be shot down due to the desire from one lawmaker to spend more on imperialism, is what prevailed.
In the past, infrastructure deals have represented new industrial opportunities for America, and now should be no different.
“Infrastructure” is defined as the basic physical and organizational structures and facilities (e.g. buildings, roads, power supplies) needed for the operation of a society or enterprise.
There have been instances in our country’s history where infrastructure projects/legislation have been used to propel our nation to new heights.
In the 1860s, despite the Civil War, construction of the Transcontinental Railroad opened the door to the markets of the West Coast and Asia to the east, as it brought products of eastern industry to the growing populace beyond the Mississippi. The railroad ensured a production boom, as industry mined the vast resources of the middle and western continent for use in production.
The early 1900s gave us the construction of the Panama Canal, a robust trade route that was newly accessible to maritime shipping, and expedited the flow of goods substantially. We also had infrastructure projects that were privately constructed but have forever changed the landscape of our great cities. Namely, the infamous fight between DuPont and Chrysler which saw the rise of the two largest skyscrapers of the time – the Empire State Building and before it, the Chrysler Building.
Towards the tail end of the Great Depression, President Franklin D. Roosevelt’s New Deal used the basis of infrastructure to get the United States out of the calamity it had endured. Although taxes were heavily raised on the wealthy, there was no safe haven outside of the United States, and the Morgans, DuPonts etc., of the day paid their “fair share” – little did FDR know that he would need this wealthy class once more to provide the footing and strength required to endure and win World War II.
As we progressed into the 1960s we had a different type of infrastructure, one where the nuclear family was prominent and the cost of living was fairly reasonable. We developed the technology that would propel us as far as the moon. However, the infrastructure projects of the past would soon change as in 1971, the United States officially decoupled off of the gold standard and the impact and devaluation of the U.S. dollar was soon felt in the tail end of the decade following the end of the Vietnam War. Inflation and high costs of living (relatively speaking) put a drag on the economy until Ronald Reagan became president.
Presently, the United States faces a similar state of duress. A national deficit pushing $30 trillion, unemployment and government dependency on the rise, and the notion that things that are part of the normal day are now considered infrastructure.
Congress is on the precipice of passing an infrastructure bill that not only jeopardizes the sovereignty of our nation but pushes the U.S. dollar one step closer to hyperinflation — a bill that pushes “social infrastructure reforms” and seeks to enhance the basic needs of the current, established infrastructure base.
A bill of this nature — which may exceed upwards of $3.5 trillion — exposes not only a bureaucracy that doesn’t seem to want to slow spending, it also ensures that the money printer will not stop. A part of the plan to “pay” for the bill is to impose taxes and regulations on the cryptocurrency and Bitcoin network infrastructures.
According to a draft copy of the bill, any broker that transfers any digital assets would need to file a return under a modified information-reporting regime. The draft defined digital assets as “any digital representation of value … recorded on a cryptographically-secured distributed ledger” or related technology. It also includes decentralized exchanges and peer-to-peer marketplaces in its definition of brokers.
Cryptocurrency has been painted with a broad brush in this new bill, which is seeking to look into all aspects of the industry from hardware to exchanges, and tax revenue is estimated to be $30 billion. This package would be subsidized via a tax hike across the board and if we fight the bitcoin tax aspect of it, we are still going to lose due to the further devaluation of the dollars in our coffers. However, ensuring that our keys and our coins are kept anonymous, and industry stakeholders are provided a haven from oversight of this nature.
As we look into the future, we will likely be seeing additional stimulus packages and subsequently the push towards the Green New Deal. It’s highly likely that we’ll see yet another infrastructure package which intends to tighten the vise grip on carbon emissions – which includes retrofitting buildings, shifting away from fossil fuels, and the creation of a central bank digital currency when our national deficit crosses unfathomable new heights.
If we give the government an inch on this, they will take a mile. Infrastructure projects of the future — especially those that are government subsidized — will be detrimental to the common man. In my opinion, a bitcoin standard will not only provide prosperity for all, it will also limit the power of the central government.
To close, as Bitcoiners, we do not have proper representation in government, nor do we need it. If we allow the government to tighten the grip and limit the innovation that Bitcoin brings — whether it’s through Environmental, Social, and Corporate Governance (ESG) compliance, taxation, and other means of oversight — we must push back and most importantly, continue to push the envelope on innovation, to create an economy that is truly beneficial for those around the world. Even if it means finding a new home.
This is a guest post by Shill Scale. Opinions expressed are entirely their own and do not necessarily reflect those of BTC, Inc. or Bitcoin Magazine.
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Lawmakers have written an amendment to an infrastructure bill in the U.S. Senate which proposes excluding certain crypto companies from the reporting requirements for brokers.
In an amendment from Oregon Senator Ron Wyden on behalf of himself and Wyoming Senator Cynthia Lummis and with the support of Pennsylvania Senator Pat Toomey, the U.S. lawmakers suggested that some of the provisions in the bipartisan infrastructure deal not apply to developers in the crypto space, miners, and blockchain firms. Specifically, the amendment proposes the definition of a broker not include anyone in the business of “validating distributed ledger transactions,” “developing digital assets or their corresponding protocols,” and dealing with mining software or hardware.
“By clarifying the definition of broker, our amendment will ensure non-financial intermediaries like miners, network validators, and other service providers are not subject to the reporting requirements specified in the bipartisan infrastructure package,” said Toomey on Twitter.
He added:
“While Congress works to better understand and legislate on issues surrounding the development and transaction of cryptocurrencies, it should be wary of imposing burdensome regulations that may stifle innovation.”
According to majority leader Chuck Schumer, the Senate is planning to vote on multiple amendments to the infrastructure bill, HR 3684, today. Among other things, the bill proposes implementing tighter rules on businesses handling cryptocurrencies, expanding reporting requirements for brokers, and mandating that digital asset transactions worth more than $10,000 are reported to the Internal Revenue Service.
However, the proposed amendment from Wyden, Lummis, and Toomey could potentially strike down some of the reporting requirements should crypto firms not be considered “brokers” in the bill. According to the trio, nothing in the proposed amendment has any effect on some of the existing laws governing cryptocurrencies, including the Securities Act of 1933 and the Securities Exchange Act of 1934.
Related:Ohio senator wants clarity for crypto tax reporting in proposed bill
Ohio Senator Rob Portman, one of the lawmakers behind HR 3684, said on Twitter yesterday that the legislation “does not impose new reporting requirements on software developers, crypto miners, node operators or other non-brokers.” Calling the section on brokers as a “common-sense provision,” Portman claimed that crypto firms simply “must comply with standard information reporting obligations.”
Related:Elizabeth Warren compares ‘bogus’ crypto to ‘legitimate’ CBDCs in senate hearing
The Blockchain Association, Coinbase, Coin Center, Ribbit Capital, and Square expressed their support for the proposed amendment today, releasing a joint statement that the infrastructure bill’s language on crypto “would place unworkable requirements on a nascent industry.” The companies suggested lawmakers get public feedback given the potential impact on the U.S. economy.
“Clarifying the provision to address our concerns would not affect the reporting requirements on crypto exchanges that operate on behalf of customers,” said the companies. ”We support sensible reporting requirements that are consistent with those that apply to traditional financial services.”
The U.S. Senate is scheduled to be in recess starting on Aug. 9, meaning it may be unlikely to address all the amendments to the infrastructure bill — or pass the legislation itself — until it reconvenes in September.
Deutsche Telekom has invested an undisclosed sum in Celo Network.
The firm purchased CELO tokens for staking and will help support Celo’s infrastructure.
Deutsche Telekom already runs a node for the decentralized oracle project Chainlink.
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Deutsche Telekom, one of the world’s biggest telecom companies, has placed another bet on crypto.
Deutsche Telekom Continues Crypto Foray
The telecommunications giant announced Tuesday, revealing that it had invested in the project and bought CELO tokens. The size of the investment was not specified. The company is planning on staking its tokens.
Andreas Dittrich, head of the blockchain solutions center at Deutsche Telekom, told Reuters:
“We have no idea where Celo will be in five to 10 years, but I think we have a pretty good idea that this is not going away”
The Celo Network uses a Proof-of-Stake consensus algorithm, similar to the one Ethereum is planning on launching later this year. The network’s users can stake tokens to become a validator on the network. That involves earning yield in exchange for verifying transactions and pays about 6% APY.
Celo Network is a blockchain payments platform is designed for mobile phones, propping up Deutsche Telekom’s interest in the project. Users can send money to one another through their mobile phone numbers, and the tokens get stored in Celo’s digital wallet. Payments and transfers are made with stablecoins. It just launched its own coin that tracks the price of the euro (it already has a dollar-pegged stablecoin).
The project has existed mostly under the radar since launching in 2017, though it’s started to gain traction in recent months.
CELO’s price has risen with the rest of the market this year, putting the project’s market cap at about $436 million, according to CoinGecko. It closed a $20 million funding round supported by Andreessen Horowitz and other venture capital firms in February.
In addition to investing in and validating the network, Deutsche Telekom will provide other key infrastructure, including an API. It’s not yet clear whether the firm plans to adopt Celo’s features for its own services, but this isn’t its first foray into the crypto space. It already runs a node for the essential DeFi oracle Chainlink and stakes tokens on Flow, the blockchain Dapper Labs built for its popular NFT game NBA Topshot.
Deutsche Telekom AG is Europe’s biggest telecommunications company by revenue. It made over $120 billion last year.
Disclosure: At the time of writing, the author of this feature owned ETH and several other cryptocurrencies.
This news was brought to you by Phemex, our preferred Derivatives Partner.
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