Should bitcoin and other cryptocurrencies attract stringent government regulations? It’s a question that has divided experts and the investor community worldwide in two diametrically opposite point of views. But surprisingly, not much has been talked about what happens if federal officials and members of Congress are holding onto a significant amount of cryptocurrencies as investments.
Should they be made to declare their bitcoin holdings like they are required to file regular reports on their assets such as bonds, derivatives, and stocks?
It is a gray area that essentially summarizes how the emergence of virtual currencies has forced the government to waste no time and catch up with the rapidly evolving domain of financial technology.
It has also caused concerns among ethics specialists as lawmakers and US agencies continue to look for new ways to regulate the crypto market.
“Whether a member of Congress has holdings of bitcoin is relevant to our understanding of where someone’s interests might lie,” says Alex Howard, deputy director of the Sunlight Foundation, an advocacy group for government transparency, according to a Bloomberg report.
Eventually, the government is moving toward an informal arrangement to ensure that lawmakers can declare their crypto holdings along with other assets. While bitcoin is yet to be listed in the official set of rules given to members of Congress and federal officials, they are advised to disclose all their bitcoin and other crypto holdings of more than $1,000.
In November 2017, the US Senate held a hearing for a bill that would potentially criminalize concealed ownership of cryptocurrencies like bitcoin, bringing crypto-assets and -exchanges under the classification of a ‘financial institution.’
Walter Shaub, Senior Director of Ethics at Campaign Legal Center, an entity seeking more stringent laws to govern the role of money in politics, says that the ideal way forward would be to classify cryptocurrencies as assets. Probably along the same line as gold bars and other similar assets.
If Shaub’s proposed move is implemented, members of Congress will have to publicly declare holdings amounting to more than $1,000, or income from the asset if it’s more than $200. Another viable strategy would be to consider bitcoin as a “cash account” in which case all holdings amounting to more than $5000 must be declared.
“The third way, which I view as irresponsible, would be to treat bitcoin as akin to paper or metal money stored in a desk drawer or safety deposit box that is not held for investment purposes,” Shaub said.
Meanwhile, the US Congress is trying to figure out a way to craft the legal frameworks for cryptocurrencies. An 11-member panel called the Congressional Blockchain Caucus is in the process of laying out the foundation “to help policymakers implement smart regulatory approaches to the issues raised by blockchain-based technologies and networks,” according to the group’s website.