The relationship between Cryptocurrencies like Bitcoin and politicians is not an easy one. What knowledge level on how crypto works do politicians have?
Cryptocurrencies and US Politicians. Most congress members in the United States do not understand Bitcoin (BTC) or cryptocurrencies, so a regulation on this would not come soon, according to the Democratic politician Jim Himes (D-CT), who assured that the Capitol handles the issue with many doubts.
The lawmaker explains that many congress members approach him to express their questions and doubts about cryptocurrencies. Among the questions he receives from his colleagues is what is the real benefit of digital assets.
‘Most of my colleagues do not have a deep understanding of cryptocurrencies. So, for better or worse, there will not be legislation passed by the US Congress anytime soon,‘ Himes said during an interview with Yahoo Finance.
Himes pointed out that members of Congress are aware of what is happening with Bitcoin and even see it as something innovative. However, officials profile cryptocurrencies as instruments that drug and human traffickers use and as potential terrorists. Generally speaking, legislators want to know what problems cryptocurrencies like Bitcoin could solve.
On this point, Himes clarified that this does not mean that there is an attempt to prohibit operations with cryptocurrencies. On the contrary, the representative assured that there would be many debates about Bitcoin in the coming years about regulating it or controlling it through taxes.
Hearings to get to know Bitcoin
The United States Congress has hosted multiple hearings that address cryptocurrencies and blockchain new challenges. The Capitol has become a place to discuss the implications that digital assets have brought. Even Facebook CEO Mark Zuckerberg testified about his Libra cryptocurrency project, later rebranded as Diem.
Since 2016, congress members have proposed various resolutions related to Bitcoin. Lawmakers Adam Kinzinger (R-IL), and Tony Cárdenas (D-CA), presented a proposal five years ago to develop a national policy promoting cryptocurrencies.
The fact that members of Congress do not fully understand how Bitcoin works is not new. However, its admission reveals that there is still a long political road to recognize Bitcoin as a new asset class, something that investment banks such as Goldman Sachs already do.
The Federal Reserve (Fed) president of St. Louis of the United States, James Bullard, disagreed that there are so many cryptocurrencies in the ecosystem. His concern revolves around the fact that most of those that exist are worthless and, therefore, useless. However, he highlighted the usefulness of crypto assets like Bitcoin that facilitate complex transactions with fiat money. He said that they have a purpose and could circulate alongside the dollar.
Bullard criticized the possibility that exists in the ecosystem to issue money privately. ‘If you allow the issuance of private currency, you will have all kinds of them, and that is what has happened. Today there are a couple thousand of these [cryptocurrencies], and most are worthless,‘ he said during an interview with the Yahoo Finance team.
The role of CBDCs
Recently, Lael Brainard, governor of the Federal Reserve of the United States, talking about the CBDC that the nation plans to issue, said that it would reduce risks for users and help stabilize the financial system.
However, the organization’s president, Jerome Powell, admitted the possible influence of its money-printing policies on the markets. Concerning the economic aid campaigns (bonuses distributed among part of the population), a greater printing of money on the Federal Reserve.
In any case, US Federal Reserve officials would like to see higher inflation before evaluating the possibility of tightening monetary policy. Many believe that Bitcoin will continue gaining prominence against the dollar as a store of value.