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The rise of cryptocurrency has sparked intense debate on its role in central banking systems, as well as economic viability in monetary supply chains.
Russia’s Central Bank has said in recent times that it did not want to legalise cryptocurrencies as they could “pose a threat to the financial system”, but Duma lawmakers later introduced a package of three bills to decide whether Bitcoin will rejected or legalised for use.
But the fear is shared by US officials such as Brad Sherman [D-CA], who stated crytocurrencies could undermine the Federal Reserve, as well as US dollar dominance and sanctions power.
Russian president Vladimir Putin ordered regulations set for July 2019, but legislation has been delayed until the end of 2019, with lawmakers exercising caution in passing bills on digital currencies. Russian central bank head, Elvira Nabiullina, has also praised the role of blockchain as an “active player in the national push for the digitisation of the [Russian] economy.
Sputnik spoke with Mr Nick Spanos, founder of Bitcoin Center NYC, the world’s first cryptocurrency trading floor which was featured in the Netflix documentary ‘Banking on Bitcoin’. Mr Spanos is urging authorities to listen to crypto innovators and keep an open mind on emerging technologies.
Mr Spanos said that his business had opened in 2013, “back when Bitcoin had a mysterious reputation”.
“[US] regulators went through phases of not knowing what to do since [cryptocurrency] laws didn’t exist, and because they didn’t understand blockchain and Bitcoin, they came down on us hard,” he said, and that many of the world’s best innovators, startups and “incalculable capital” had raced to other US states and abroad, with state officials “trying to entice them back.”
“It’s a good sign that Russia is taking its time,” Mr Spanos said.
He added that Russia’s “openness to an offshore crypto hub” allowed the technology to “prove what it can do to make the economy and government more efficient” as well as “attract jobs and capital”
Mr Spanos said that it was important to give “users and innovators peace of mind that they won’t feel like criminals for trying out the latest technologies”.
“Money laundering and drug dealing are already illegal and are dominated by legacy banks and banknotes, so it doesn’t make sense to lash out at new technologies that often provide more transparency and chain-of-custody,” he said.
“Bitcoin is pseudonymous, but fiat notes are anonymous,” Mr Spanos added.
Speaking on his experience with regulators, Mr Spanos recently launched the Digital Asset Policy Network (DAPNet), a nonprofit advocacy organization for pro-crypto regulations and fair taxation.
“Right now, we’re learning more and more about how US tax authorities plan to crack down on cryptocurrency users” he said, “but they’ve still yet to clarify their initial guidance issued back in 2014.”
Mr Spanos said that things worsened in the 2018 tax year, where crypto trades were taxed. “Before you’d owe tax only when you cash out, but now you owe capital gains and sales taxes on every trade, so many people ended up with huge tax bills larger than their digital asset portfolios,” Mr Spanos said.
The US needed “a quick patch and a tax holiday for the millions caught in this unsustainable situation,” Mr Spanos urged.
“We went to Belarus in 2017, and after meeting with [Belarusian president Alexander] Lukashenko, he directed the country to become competitive and even granted special visas for blockchain companies,” Mr Spanos said, noting that countries “with the least to lose” were the quickest to notice “what crypto and blockchain has to offer”.
“From Malta to the Marshall Islands, blockchain is solving first-world problems and existential threats alike,” he said, adding that when implemented correctly, it was good for everyone when national currencies were “tied to commodities like gold or oil”, where people would gravitate “towards something that’s redeemable” rather than those “with values based on smoke and mirrors”.
“It must be transparent, provable, and redeemable in order to succeed,” Mr Spanos said.