…and he’s using the Secret Service to do it.
With the recent news in the past couple of weeks, one thing seems to be very clear: Cryptocurrencies are seen for their potential to do harm rather than good.
- In President Trump’s budget proposal for 2021, he puts the Secret Service back into the department of Treasury. His reasoning seems to be specially focussed on cryptocurrencies and their potential to be used for money laundering and terrorism finance.
- In March 2020 (and after getting educated about cryptocurrencies last year), the IRS wants to talk with Crypto industry leaders to figure out better ways to tax crypto gains.
A Secret Service Homecoming
The Secret Service was born and raised in the Department of Treasury, where it was founded in 1865 to combat the counterfeiting of US Dollars. It was then moved to Homeland Security in 2002 to fight against terror and ensure the safety and security of the country.
In his budget proposal for 2021, President Trump wants to move the Secret Service back to where it originated.
Cryptocurrencies are mentioned as one of the main drivers behind that decision:
“The Budget continues the Administration’s investment in economic tools to advance foreign policy and address emerging threats, such as the use of cryptocurrencies in money laundering and terrorist financing.”
This is the most prominent change proposed for the Department of Treasury and its connection to cryptocurrencies is especially notable.
Why should I care?
This re-integration of the Secret Service is framed as anti-terror and anti-money laundering efforts. It will, however, lead to closer ties between finance and law enforcement, especially looking at currencies. Overall, it might increase the negative light in which cryptocurrencies have been presented in much of mainstream media.
It might also lead to increased capabilities to go after tax evasion than before.
The IRS is Playing Ball, too
The IRS is talking to Crypto firms about taxes in a “Crypto Summit” in Washington in March. This meeting is supposed to increase the exchange of information and bring industry and government closer together.
The declared goal that was part of the invitation sent out to one attendee is to “balance taxpayer service with regulatory enforcement”.
On the one hand, this secluded and semi-secret meeting between industry and IRS doesn’t scream “transparency”. At the same time, it’s sad to see that the one department that seems to be taking an active interest in technology is the one whose primary goal is to take your money.
On the other hand, more regulation isn’t always a bad thing. Over the past few years, it has felt a bit like the Wild West over in Cryptoland. And having a Sheriff in Town who actually knows what’s up might actually help the industry mature and get out of the dark basement that it has spent much of the last decade in.
Adoption is a Double-edged Sword
We see crypto as this innovative and transformative technology that will change the world for the better.
The only times the government mentions it is in combination with tax fraud, money laundering, and terror financing. and a threat to the dominance of the USD.
As members of the crypto universe, it is on us to show the FIAT-world the potential of this new technology. Sure, there might be ways of using this awesome technology for evil — but then, even a peace-pipe can be used to whack someone over the head.
At the same time, as a community, we need to take a good look at ourselves and ask: “Are we part of the problem or part of the solution?”
Of course, we do want to disrupt and innovate, we want to create and transform. But going directly and head-on against the US government has seldom been the easiest and most efficient route to success.
As is so often the case in politics, money can be the answer. Instead of going against the IRS (which even landed Al Capone in prison), it might make sense to send positive signals their way. Without wanting to sound like a wannabe-cool soccer mom promoting abstinence-only, here’s a proposal:
“Adoption and Innovation take time. Regulation speeds up processes. Learn to read between the lines and pick your battles wisely.”
No matter what happens with US politics in 2020 (Even Bloomberg has brought up that missing regulation in Crypto markets is an important issue to tackle), it will be important to get your ducks in a row this year. And that means declaring your income to your tax authorities.