According to venture capitalist Kevin O’Leary, four recent policy developments will make a huge positive impact on the future of mass cryptocurrency adoption.
During an interview with Kitco News on March 25, O’Leary identified the following policy developments:
- The Lummis Bill
- President Biden’s Executive Order about Cryptocurrency regulation
- SEC focus on carbon audits
- BlackRock decrying Bitcoin mining and carbon credits not aligning
O’Leary concludes that these unprecedented developments show crypto is never going away. He also argues that the more crypto gets regulated the more institutional investment it will attract. And, as institutional investment increases by trillions of dollars, liquidity and volatility will no longer be issues.
Wyoming Republican Senator Cynthia Lummis is the principal architect of the Responsible Financial Innovation Act, which she hopes will clarify how cryptocurrency can be taxed in the United States.
To resolve some areas of ambiguity, this bill intends to clarify the taxation of cryptocurrency mining, staking and spending. It will provide guidance to the IRS about exclusion criteria for capital gains, based on the understanding that mining or staking does not actually get rid of the asset.
The bill is expected to also give a tax exclusion of up to $600 to allow investors to spend small amounts of cryptocurrency without having to worry about tax implications.
On March 9, Lummis tweeted
“It’s been a long time coming, but my bill to fully integrate digital assets into our financial system is almost ready! I’m putting the final touches on it with some key advocates and partners in the Senate, but watch out for an unveiling soon!”
On March 9, President Biden signed an executive order directing the government to move forward on cryptocurrency regulation.
The order specifies the following agenda items to be addressed:
- Consumer, investor and business protections
- Stability in U.S. and global financial markets
- Illegal activities and national security risks
- U.S. technological and economic competitiveness
- Responsible innovation, design and implementation of digital asset systems
- Provide safe and affordable access to cryptocurrency financial services
Some of the concerns that are expected to be addressed include impacts of crypto mining on the climate, and the role cryptocurrency is playing in Russia’s invasion of Ukraine. Finally, the executive order also directs an exploration of a central bank digital version of the dollar.
In response to the executive order, David Wachsman, CEO of Wachsman PR said:
“Joe Biden just gave crypto companies the green light to exist . . . we just heard Joe Biden say that cryptocurrencies can be important for the future of the U.S. economy . . . and he didn’t just mean the rich people on top, the investors. He meant the middle class and the working class.”
On March 21 the SEC proposed new rules that would require businesses to report their impact risks for global warming, including greenhouse gas emissions. At face level this requirement might seem to pose challenges for energy intensive proof-of-work crypto mining, especially Bitcoin mining.
O’Leary believes, however, that Bitcoin mining is good for sustainability, because smart businesses are already gravitating toward sources of renewable energy. He cites the availability of 100% renewable hydroelectric power using turbines at existing dams. This would work for businesses that don’t want to have to offset dirty mining with carbon credits that would be subject to SEC audits. Plus, it would allow excess power to be sold back to the public community. He goes on to say that this solution is good for everyone except Bitcoin mining companies like Marathon Digital which has to use auditable carbon credits to get to 100% carbon neutrality.
The new SEC rules would require disclosure by publicly traded companies of the following information:
- Management of climate-related risks and associated risk-management protocols
- The ways in which climate-related risks will impact the business materially and financially
- How climate-related risks affect the business’ strategy and planning
- Direct greenhouse emissions
- Indirect greenhouse emissions from purchased electricity
- Greenhouse gas emissions from upstream and downstream activities within the value chain
- Reliance on carbon offsets
BlackRock, the world’s largest asset manager, focuses on environmental, social and governance (ESG) investments. In fact, according to Financial Times, nearly sixty percent of assets in ESG ETFs are under BlackRock management.
BlackRock’s focus on sustainability should position it as an investor in companies that use 100% renewable energy, however Fink has been quoted as saying “‘traditional energy’ companies were ‘part of the solution’ alongside environmental investment policies,” leading environmental advocate Greenpeace to suggest BlackRock is “trying to have their cake and eat it.”