On July 18th, 2018, the US Congress held a subcommittee hearing on crypto. The focus of this hearing was “to explore key issues related to cryptocurrencies and their potential impacts on law enforcement”. This post will go over the top 5 takeaways from this meeting.
1. The Bitcoin XT Case
One of the first things mentioned at this hearing was the issue of a modified version of Bitcoin called “Bitcoin XT”. This software has been described as a “non-Bitcoin” feature and is used to mine Bitcoins even though it is not an official Bitcoin software. It is banned from the original Bitcoin blockchain. It has a noticeable effect on the size of blocks mined by other miners.
2. The Criminal Use of Crypto
This is one of the main areas that the hearing focused on. The US government is concerned with the potential use of crypto for money laundering and terrorist financing. This hearing featured testimonies from 3 individuals who have different views on crypto:
One man whom the Department has convicted of Justice for helping his friend transfer $200,000 from overseas to the United States using Bitcoins, A professional Homeland Security Agent who monitors terrorist financing, and A representative from Coinbase.
The agent discussed the use of crypto as a means of terrorist financing. The agent claimed that their research showed that Bitcoin was currently used to launder money from countries like Afghanistan, Syria and Venezuela. He also claims that BTC is being sent to funds that are tied to ISIS and Al-Qaeda.
3. Regulating crypto
This hearing had in common with many other blockchain hearings, prioritizing regulation over technology. The representative from Coinbase claimed that this is a great time for innovation in crypto but that the US government should carefully regulate the space to prevent the dangers of crypto from becoming a bigger issue.
The representative from Homeland Security went into greater detail, stating that there is “a fundamental conflict between the way technology is advancing, and the way regulations are trying to keep up”. He also stated that he believes that “technology will solve most of the problems” if appropriately regulated.
4. The Global Impact of Crypto
Bitcoin’s role in the global economy was discussed, and some of the pros and cons were brought up. One pro was that Bitcoin is “a safe haven” for people in countries with struggling economies. But on the other hand, one con was that it gives “illicit actors” a way to transfer money internationally without needing to go through government or financial systems.
5. “The Future of Money”
This was the title of the hearing, and it was discussed at length. The Homeland Security agent stated that he believes that crypto is the future of money. However, he also claimed that this could pose a possible danger to society because we might introduce too much volatility into the economy.
The representative from Coinbase claimed that there are more than 100 million people using crypto, and another congress member asked her if she believed that this technology would eventually replace fiat currency. She claimed that crypto isn’t the future of all money but that it “will change money as we know it”.