USA is the world’s biggest economic power and the issuer of the world’s most used unit of account and reserve currency, so it is no surprise that its politics has big influence on the world economy, and its crypto part in particular.
Local and state politics increasingly pro-crypto
This week was marked by the mayoral election in some major US cities, including Miami and New York. In Miami a notorious crypto enthusiast Francis Suarez was re-elected with almost 79% of the votes, and in the NYC another pro-crypto politician Eric Adams won with almost 73% of the votes.
Together these cities are home to almost 9M people (29M in their metropolitan areas) who are known for their enterprising spirit the ability to create their own distinct culture. Adding crypto into the mix looks truly exciting and can set an example not only for other US cities, but for the whole countries.
Adams vowed to make NYC “the center of the cryptocurrency industry”, while Suarez wants to “make sure that there is no city or state that has more favorable laws and regulations”, both aiming at attracting crypto businesses in their cities. Some smaller cities mayors also chose to take the crypto side: Jane Castor of Tampa, FL, Scott Conger of Jackson, TN or Jayson Stewart of Cool Valley, MO have been quite vocal as to the crypto ambitions of their cities.
On a state level Senator Cynthia Lummis of Wyoming is famous for slamming the US government over the ever-increasing debt and inflation, while praising Bitcoin. Wyoming is a crypto-friendly state famous for giving out the first crypto banking license to Kraken last year, and recently legally recognizing DAO.
Texas Governor Greg Abbot and Senator Ted Cruz also have far-reaching crypto ambitions, aiming at making their state “the crypto leader” and attracting Bitcoin mining business. Texas has indeed abundant sources of energy, including many windmills and natural gas (also coming as a byproduct of oil extraction), and developing crypto mining could not only make use of this energy (and avoid natural gas to be flared into the atmosphere), but also help Texan deregulated grid to better face extreme situations like this year’s winter storms.
So far Texan politicians did a good job of attracting Chinese miners and largely contributed to making the US a new world mining leader.
Federal government increasingly authoritative
However, there’s a limit to what mayors and senators can do.
On the Federal level crypto is regarded mostly as a possible source of tax and penalties income, and President Biden’s Infrastructure Bill that passed the Congress this week could make crypto industry situation much more difficult, imposing very strict reporting obligations on virtually everyone working with crypto, which will make it impossible for some crypto businesses to comply (the DeFi being one of the most obvious victims). The Bill’s crypto provisions were actively fought by the crypto lobby, but without success, showing that the balance of power on the Hill is not yet ready to sway. Ironically, a compromise amendment to the bill was killed by an 87-year-old Senator Richard Shelby, who decided to block every amendment as a sign of disappointment that the Bill did not include additional $50Bn in military spending 🤦
Some other non-elected US officials actively impede crypto development in their country. The most prominent example is a 75-year-old Janet Yellen, ex-Head of the Fed and an active Secretary of the Treasury, also known for gaining millions of dollars in “speaking engagements” with the banks while holding office. The SEC and its Chairs is also historically opposed to crypto, refusing for years to give clear guidelines on which cryptoassets it considers securities (an on-going lawsuit against Ripple is a great example of this bias). The OCC (banking authority) was previously headed by a pro-crypto Brian Brooks, but President Biden recently appointed a radical oversight fanatic Saule Omarova, who believes not only that crypto threatens to destabilize the economy, but also that consumer banking should be moved from private institutions to the Fed 😬
Can people’s interest go all the way to the Hill?
With the rising inflation and increasingly burdensome obligations (like the Treasury’s requirement of banks to report to the IRS the data on the accounts with over $600 of annual transfers), more and more people start doubting decisions taken by the Biden-Harris Administration. However, they cannot really influence them now, and their displeasure with the appointed officials is somewhat futile… for they are not elected and couldn’t care less about the constituents. And the President… well, let’s say it is highly unlikely that a 78-year-old Joe Biden will be looking for a second office.
Local and state authorities are elected, which means that they are more inclined to listen to the people, and a rising crypto adoption (ironically, stimulated in big part by the Fed’s money printing) is putting crypto regulations at the forefront of their agendas.
The US politics is a complicated mechanism, and the crypto issue is about to give us an interesting example of how it works. For the sake of the American people, we hope that the politicians who are closer to them would protect their interests all the way to the (mostly) geriatric and increasingly authoritative top.
Art and NFT
An increasing crypto adoption and popularity can be clearly seen in this year’s NFT.NYC conference.
While in 2019 it attracted only 460 attendees, this week they were 5000, including some big names like Quentin Tarantino, Beeple (the artist behind the most expensive NFT ever), Wikipedia founder Jimmy Wales, rapper Busta Rhymes or Reddit cofounder Alexis Ohanian.
The event highlighted one of the reasons people spend millions on pixelized JPEGs – they allow to identify with a community. Cryptopunks or Bored Apes Yacht Club (who actually hosted a party on a Yacht) are some of the examples, and the digital nature of NFTs allow all sorts of incentives to be dropped to the NFT owners.
The above-mentioned Biden’s Infrastructure Bill might have complicated the life of American crypto companies, but it also marked another round of dollar printing: a big part of its $1.2Tr is likely to be “borrowed” from the Fed that will conveniently create more money for this purpose. Diluting dollar value is a bad thing for all people who hold it, and a good thing for the assets that are good in storing value – including Bitcoin.
BTC gained 10% this week, surpassing $66k and almost reaching its previous all-time high. Crypto Fear & Greed Index is now showing an affirmative “Greed” and more and more analysts call for a triple figure by the end of the year.
Ethereum price has been steadily rising for a month now, gaining another 14% this week.
It also marked its first deflationary week, as more ETH have been burned as base fees than created, all thanks to the London fork. As ethers become scarcer, their price reacts accordingly.
Quote of the week
“So, thank God for bitcoin, and other non-fiat currencies, that transcends the irresponsibility of governments, including our own. That is an indictment of our responsibility … to address this looming, predictable, massive issue.”
Cynthia Lummis, Senator for Wyoming, US