A leaked memo has surfaced, shedding light on the Democratic Party’s plans for a comprehensive crackdown on cryptocurrencies in the United States. The document provides insight into the key messages that Democratic lawmakers were advised to convey during an upcoming joint House hearing on crypto policy. If implemented, these actions could have significant implications for the crypto market.
Democratic Party’s Stand on Crypto Compliance and Regulation
The memo dated May 9, 2023, was leaked via Twitter by Fox Business reporter Eleanor Terret on May 11, 2023. It focuses on how the Democratic Party underlines the importance of enforcing existing regulations and ensuring compliance within the cryptocurrency industry. They argue that clear regulatory structures must be followed by crypto companies to protect investors and consumers.
Forbes hints that the document is linked to the executive order of US President Joe in 2022 that instructed federal agencies to look into Bitcoin and Ethereum as well as the crypto boom.
Potential Classification of Cryptocurrencies as Securities
The memo suggests that the Democratic Party is considering categorizing almost all cryptocurrencies as securities. This controversial move could subject these digital assets to stricter regulations and oversight from regulatory agencies such as the US Securities and Exchange Commission (SEC).
If implemented, this reclassification may have a profound impact on the crypto market.
Partisan Divide and Opposition from Republicans about the Suggested Crypto Crackdown
Cryptocurrencies have become a divisive issue, with high-profile Republicans, including Senator Ted Cruz, expressing support for digital assets. In contrast, influential Democrats like Elizabeth Warren have taken a more critical stance, even vowing to build an “anti-crypto army.”
The leaked memo urges Democratic lawmakers to push back against Republican claims and assert that they are committed to protecting investors and consumers.
Concerns over El Salvador’s Bitcoin Adoption
The leaked memo also references a bipartisan bill that has been reintroduced in Congress. This bill aims to assess El Salvador’s cybersecurity and financial stability capabilities following its adoption of Bitcoin as a legal tender.
Lawmakers argue that the use of Bitcoin in a national economy could have implications for economic stability, money laundering, and illicit financial activities.
SEC’s Authority and Request for More Resources
Under the leadership of Gary Gensler, the US SEC has asserted its authority over the crypto market. The memo indicates that the regulator considers most cryptocurrencies, apart from Bitcoin, as unregistered securities.
In relation to this, Gensler has repeatedly requested additional resources from Congress to enhance the SEC’s ability to regulate the crypto market effectively.
Reactions to the Leaked Memo Ordering a Crypto Crackdown
The leaked memo generally generated outrage in the crypto community. Ari Paul, the CIO of BlockTower Capital, was one of the major personalities in the industry who voiced out his thoughts on the matter.
Bizarre that they put something so blatantly illegal in writing. The SEC has no authority to determine what is and isn’t a security under law. For them to do so would be a violation of the laws governing their operation.
BlockTower Capital CIO Ari Paul via Twitter
Final Thoughts
The leaked memo provides a glimpse into the Democratic Party’s plans for a potential crypto crackdown in the United States. The suggested actions, such as classifying cryptocurrencies as securities, would have far-reaching consequences for the crypto industry. However, the memo’s content has drawn criticism from industry experts who question the SEC’s authority in determining the classification of digital assets.
As the debate continues, it remains to be seen how these proposed measures will shape the future of cryptocurrencies in the United States.
Giancarlo is an economist and researcher by profession. Prior to his addition to Blockzeit’s dynamic team, he was handling several crypto projects for both the government and private sectors as a Project Manager of a consultancy firm.
