Top Banking Regulator Nominee Concerned About Tech Giants Controlling Crypto, Undermining Economy: Report

Saule Omarova, President Joe Biden’s nominee for Comptroller of the Currency, is troubled by the prospect of the US dollar being circumvented and replaced by private digital currencies.

While giving testimony before the Senate Banking Committee, the Cornell Law School professor says she is particularly concerned that big tech companies might utilize cryptocurrencies to consolidate even more power.


 

“My concern is… we may end up in a situation where a large company, like a big tech company, might control all of the infrastructures through which the money that every American and every American business uses in their daily [lives].”

Omarova adds that national sovereignty and the status of the US dollar could be put at risk by multinational companies issuing a competing currency.

“My concern is that in the system where a lot of private actors like Facebook can issue their own version of currency, that can potentially outpace and even displace the US dollar.”

The professor says she prefers for the US dollar to remain the world’s dominant currency.

“I believe that we do have government-issued money right now in this country, and it’s working great, and I worry about allowing private innovation to undermine a lot of important public policies that we need to pursue.”

When asked by Wyoming Republican Senator and cryptocurrency proponent Cynthia Lummis which specific policies that she intends to pursue, the nominee cited national security, to which Lummis replied, “Do you think Bitcoin [BTC] threatens national security?”

Omarova responded,

“I am not an expert on Bitcoin, but I would worry if all of our financial transactions were [reliant upon] some blockchain system where various actors who might actually be located in other countries, not particularly friendly to us, control the functioning of that system. That would be my worry.”

The professor is open to the idea of a central bank digital currency (CBDC), however.

“Central bank digital currency, like any digital currency, would make a couple of things easier to achieve in the financial system than they are today.

One is the efficiency of moving money around… [That] is an incredible risk-reducing tool in the financial system…

The one potential advantage of a CBDC over private stablecoins is that it will be issued subject to statutory mandate, legal decisions made by democratically elected lawmakers.

That would allow the central bank, under the oversight of Congress… to ensure that everybody has fair access to the new form of money.”

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US Senators Introduce New Bill To Trace Foreign Crypto Mining Activity

The U.S. Senate is putting legislation in place that will compel the Secretary of the Treasury to submit a report to Congress on cryptocurrencies and their usage across the globe.

The bill, jointly introduced by Senators Maggie Hassan (D-NH) and Joni Ernst (R-IA), directs the Secretary of the Treasury to commission a report examining global cryptocurrency mining activity with the help of other offices and agencies.

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Part of the report should contain information on the world’s largest public and private cryptocurrency miners and the impact of mining activity on countries practicing it.

“[The report shall] assess how foreign countries use and mine virtual currencies, including identifying the largest state and private industry users and miners of virtual currency, policies foreign countries have adopted to encourage virtual currency use and mining, and how foreign countries could be strengthened or undermined by the use and mining of cryptocurrencies within their borders…”

The bill states that the types and values of various cryptocurrencies mined over a six-year period, both domestically and internationally, should also be included in the report.

“[The report shall] identify, to the greatest extent practicable, the types and dollar value of virtual currency mined for each of fiscal years 2016 through 2022 within the United States and globally, as well as within the People’s Republic of China and within any other countries the Secretary of the Treasury determines are relevant…”

The Secretary of the Treasury’s report should also reveal the impact of cryptocurrency mining on the supply chain.

“[The report shall] identify vulnerabilities, including those related to supply disruptions and technology availability of the global microelectronic supply chain, and opportunities with respect to virtual currency mining operations.”

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US Senate Proposes Amendment to the Controversial Infrastructure Bill to Redefine Crypto Broker Clause

Three American Senators, including Oregon Senator Ron Wyden, Wyoming Senator Cynthia Lummis, and Pennsylvania Senator Pat Toomey, have proposed an amendment to the controversial Infrastructure Bill.

The bill initially classified some crypto entities, including miners, as brokers with the need to report transactions worth $10,000 and above to the Internal Revenue Service (IRS). 

However, the amended version proposes that the definition of a broker does not include anyone in the business of “validating distributed ledger transactions,” “developing digital assets or their corresponding protocols,” or dealing with mining software or hardware. This definition clarifies the bill, which many considered unhealthy for the growth of the nascent crypto ecosystem if passed.

“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,” said SenatorPat Toomey commenting on the proposed amendment. “By clarifying the definition of the 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.”

The proposed amendment has met with much acceptance from the cryptocurrency community, notably the Blockchain Association comprising Coinbase, Coin Center, Ribbit Capital and Square. The major players in the digital currency ecosystem previously noted that the infrastructure bill “would place unworkable requirements on a nascent industry,” like that of the crypto ecosystem. 

In a joint statement issued by the association, the firms said they support “sensible reporting requirements.”

“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.”

With the Senate set to go on recess by Aug 9, the amendment to the bill and other amendments to the broader bill may not come into effect until September, when the lawmakers resume plenary.

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Bitcoin and Crypto Advocate Appointed to Powerful US Senate Banking Committee

Noted Bitcoin and crypto advocate US Senator Cynthia Lummis (R-WY) is now on a highly influential Senate committee that oversees the nation’s banking regulations.

In a statement following her appointment to the Banking, Housing, and Urban Affairs Committee, Lummis says she hopes to advocate for her state’s financial innovations and encourage the development of the digital asset sector.

“Wyoming has been leading the way on financial innovation over the last several years. Through my role on the Banking Committee, I hope to shine a light on many of these pioneering efforts and work with federal regulators to ensure that regulation of digital assets are structured to encourage innovation, instead of stifling it. I also look forward to providing regulatory relief to our community banks and ensuring that we have vibrant, safe financial markets.”

Lummis bought her first BTC in 2013 and has since been a hodler of the leading cryptocurrency.

The first women to represent Wyoming in the Senate previously said that she wants to bring Bitcoin into the national conversation, asserting that the king coin is a solid store of value.

The CEO of Wyoming-based crypto asset banking company Avanti Financial Group, Caitlin Long, says the move is a big step forward for the industry.

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