Donald Trump and Bitcoin

Donald Trump and Bitcoin

Donald Trump and Bitcoin seems to be a mystery to everyone.

The White House is closely watching cryptocurrency, the Fed Governor Powell is considering a state-back cryptocurrency, but the president stays quiet.

The most controversial president-elect in the US history – Donald Trump – tends to be the first one commenting on worldwide events and trends.

So it comes as a surprise that, so far, Trump’s Twitter feed has been oddly silent about Bitcoin and cryptocurrency in general.

While Donald Trump and Bitcoin tale hasn’t officially started yet, the president’s staff seems to be busy creating a national blockchain strategy.

Last month, Trump appointed Jerome H. Powell as the next chairman of the Federal Reserve (Fed) – Governor who’s well-known for his scepticism towards Bitcoin, but enthusiasm for blockchain technology.

A few days later, Trump signed a $700 billion military spending bill that includes a mandate for a blockchain cybersecurity research study.

Could it mean that America is finally going to catch up with European blockchain frenzy?

America’s Blockchain Cybersecurity Study

Trump Bitcoin and blockchain

The study bill was advanced by the U.S. Senate in September 2017 to investigate potential applications of blockchain technology and other DLTs in criminal activities.

The study itself will assess the current and future use of such technologies by foreign powers, extremist organisations and criminal networks.

Since the research has been given the green light, the first results of the study are expected to be delivered to Congress within the next six months. The study will be prepared by the Department of Defense, and will likely have input from other federal agencies and departments.

The US is not the first country to launch a national blockchain strategy, supported by a substantial amount of research.

Two European nations – Malta and Austria – are already steps ahead will a broad agenda on how blockchain technology can be utilised and what are the legal implications behind it.

Malta together with Gibraltar is also considering regulating the grey area of cryptocurrency – ICO.

Hence, the possibility of the study to come out with a negative result is highly unlikely.

The US’ blockchain study has good chances of exploring the possibilities of blockchain being used for the government’s purposes, such as land registry, storing medical health records etc.

However, it is almost impossible to imagine that the study would work in favour of cryptocurrencies and if so, it would instead lead to creating a national digital currency.

Jerome H. Powell on America’s National Cryptocurrency

Jerome H. Powell on America’s National Cryptocurrency

Trump’s nominee for the next chair of the Federal Reserve – Jerome H. Powell – has previously expressed his reluctance towards cryptocurrency due to its past with criminal activity.

At the same time, he admits that blockchain and other DLTs can strengthen the security and open further development of financial systems.

Powell has recently given a talk to the Yale Law School Center for the Study of Corporate Law, and the majority of it was devoted to DLTs.

He explained that even though everyone should be grateful for Bitcoin invention as it exposed its underlying technology – blockchain – we shouldn’t forget about the current technical issues.

Bitcoin is well-known for its scalability issues, and multiple forks and Ethereum has been a victim of many hackers’ attacks. This poses a question of how robust cryptocurrencies actually are?

None of the cryptocurrencies is regulated, hence if anyone is affected by the lack of their reliability, scalability and security, then… Well… There’s nothing that can be done.

Therefore, until all of those issues get resolved, the talks about cryptocurrency being seriously incorporated with the country’s economy won’t move forward.

Nonetheless, Powell isn’t entirely cynical about cryptocurrency – he feels encouraged about the new technologies, and he doesn’t want to disregard any innovations that can fuel the economic growth.

To the extent, that he discussed a possible future state-backed cryptocurrency:

“Advanced cryptography could reduce vulnerability to cyber attacks,” he insisted, “but make it easier to hide illegal activity. To the extent we relax strong cryptography to make it easier for authorities to monitor illegal activity, we could simultaneously weaken security.”

The Current Bitcoin Laws in America

The U.S. Treasury classified Bitcoin as a convertible decentralised digital currency in 2013.
Further from that, in 2015, the Commodity Futures Trading Commission (CFTC) classified Bitcoin as a commodity.

Currently, Bitcoin is taxed as property by IRS and is considered as funds with a full meaning of that, similar to stocks and bonds.

While purchasing goods with Bitcoin isn’t illegal, those who mine Bitcoins, trade them for fiat currency or operate cryptocurrency exchanges, could be a subject to special laws.

Buying Bitcoin and any other cryptocurrency from the US still seems to be relatively easy. Some of the most popular exchanges, such as Coinbase or cater for American customers.

However, national and local banks might have specific regulations regarding the amount that can be transferred to cryptocurrency exchanges. Hence we advise checking with your bank provider.

The Future of Bitcoin in America

An answer to this question is the same like in a majority of developing countries – Bitcoin is here to stay, regardless of imposed regulations.

It’s doubtful Bitcoin will replace fiat currency in the next few years, but it will certainly keep on making more impact on the American economy.

Undoubtedly, we will have more information and a better overview of the future of Bitcoin in America as soon as the study is completed in 2018. But, we should be expecting a development regarding implementing blockchain technology.

The White House has openly admitted that it’s watching cryptocurrency closely and monitoring its progression.

However, no further details have been revealed and it’s obvious America’s stand on cryptocurency is much more reserved that European’s IMF.

As for Donald Trump and Bitcoin, I think it’s clear that until the Senate completes the necessary research, the topic cannot be personally discussed by Trump in public.

The president’s opinion should represent the voice of the country, and for once, Trump seems to understand his role.

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