Digital currency may soon become an issue that could unite US politicians.
Recent US Congresses have been some of the least productive in the country’s history, and the 113th Congress has been no different. The sheer number of policy-related issues tabled since January 2013 has put the current Congress on pace to become the least productive in the nation’s history, rivaling the 112th Congress in how few laws it could ultimately pass.
With so many issues dividing American legislators, it may be natural for bitcoin enthusiasts to wonder when the technology will become an issue in the nation’s capital. Further, if it does hit this inflection point, questions remain about whether bitcoin could achieve bipartisan support or how much resistance the digital currency would face.
Chris David, founder of CoinVox, a startup helping political fundraisers more effectively use bitcoin, believes the digital currency may soon become an issue that could unite US politicians, given the technology’s potential applications to help expand financial access.
David told CoinDesk:
“Bitcoin and block chain technology, if allowed to evolve naturally, hold the potential to shift society away from the zero-sum politics of the past. “
The cost of Congressional inaction
One potential byproduct of Congressional inaction on bitcoin might be that other government agencies start taking action to address their respective areas of oversight. There is the risk that different agencies could also disagree on how to treat bitcoin, and there’s good reason for that, since it has many different technical aspects.
The Internal Revenue Service (IRS) has, understandably, had to provide guidance on how to report bitcoin for tax purposes, treating it like property instead of currency. Other agencies like the Commodities and Futures Trading Commission (CFTC) have also weighed in on the subject of regulating bitcoin, though it has not entered the debate as to whether bitcoin is a currency or commodity.
Dan Backer, founder of a political action committee named BitPAC, told CoinDesk that he predicts at least one more agency could jump into the bitcoin regulatory fray:
“The [Securities and Exchange Commission] SEC is probably going to weigh in at some point. But ultimately the different ways agencies will want to deal with the issue will lead to Congress providing clear guidance that is uniform.”
This notion highlights why congressional decisions will, at some point, need to be made on how bitcoin should be interpreted.
“Either it is money, or it is a thing, or it is a commodity – or an equity. Whatever it is, it needs to be definable in order for agencies to understand how to deal with it,” said Backer.
Democrat, Republican or Libertarian?
There have already been some committee discussions in Congress about bitcoin, most recently on small business use of the digital currency. But even so, many in Congress have not had an actual experience with the digital currency.
For the time being, this means there is still a divide between politicians who understand bitcoin and those who think it is a threat to consumers.
BitPAC recently aimed to change this by sending bitcoin paper wallets to eight well-known members of Congress.
“You look at Jared Polis from Colorado – he is a Democrat, and he’s exceptional on this issue,” said Backer. “But on the flip side I think Joe Manchin from West Virginia [a Democrat] – I think if you talk about bitcoin mining with him he thinks there’s some guys with axes down in the mines.”
Of course, there’s also the question of which party is most likely to make bitcoin a part of its financial platform.
Bitcoin has long been considered a Libertarian-leaning technology because of its free market properties, though certain state-level Republican organisations have embraced the technology too.
The Libertarian party’s platform includes allowing currencies to freely float untethered from the control of central banking – which is similar to how bitcoin behaves right now.
“I think Libertarian legislators, they tend to like [bitcoin] a lot more,” Backer said.
Still, the Libertarian party and its ideals, while gaining support in recent polls, appeals to just under one-quarter of the overall electorate, research shows.
Point of action
Still, while the idea that Congress might step in to allow bitcoin innovation to flourish (or at least provide clarity about its legal status) is appealing to those interested in the technology, experts believe such action is unlikely for now.
David Levinthal, a senior political reporter for The Center for Public Integrity, believes it might require national media headlines before Congress might take up the issue of bitcoin more specifically.
“For bitcoin to leapfrog other pressing congressional issues — not the least of which are military action overseas, the broader economy and November’s election — it’d likely take a monumental problem, such as a scandal involving bitcoin that they simply couldn’t ignore.”
However, politicians pay attention to money, and with few exceptions, most people still donate to campaigns in US dollars. This may cause bitcoin to take a backseat, at least for now.
Cash is still king, according to Levinthal:
“Most political donors deal only in traditional currency, so it serves to reason that most political donations are going to be made in cash.”
Campaign finance issues aside, in the end, US politicians may ultimately make decisions on how to properly label bitcoin and subsequent digital currencies. None of this matters, however, until there is a reason for members of Congress to act.
The bitcoin community showing support for Congress may be the best impetus for action, rather than waiting for an undesirable event to force policy.
“The community needs to create a critical mass of support in the political realm for embracing block chain technology. The arguments are easy to make, we just need to make them in a way that will be heard and acted upon,” added CoinVox’s David.
Photo credit: Bitcoin Vox