Politicians in the United States are finally voicing a concern that had previously only been heard on the fringes of economic discussions: cryptocurrencies such as bitcoin pose an existential threat to the financial system and the central banks that ensure its operation.
The concern comes as bitcoin regains its clout after facing what many analysts saw as its terminal decline in late 2017, when its price began to precipitously fall. However, bitcoin is now holding steady at around $8,000 per bitcoin, about double its price at the start of the year.
The fierce return of the cryptocurrency, as well as its capability to skirt global U.S. monetary controls, has caused U.S. Democratic Congressman Brad Sherman to push his fellow legislators to comprehensively ban bitcoin and other cryptocurrency on the basis of the threat it poses to U.S. control over international finance. In his words, bitcoin must be “nipped in the bud.”
According to Crypto News, earlier this month Sherman told a meeting of the House Financial Services committee:
“I look for colleagues to join with me in introducing a bill to outlaw cryptocurrency – the purchases by Americans – so that we nip this in the bud in part because an awful lot of our international power comes from the fact that the dollar is the standard unit of international finance and transactions.
Clearing through the New York Fed is critical for major oil and other transactions. It is the announced purpose of the supporters of cryptocurrency to take that power away from us, to put us in a position where the most significant sanctions we have against Iran, for example, would become irrelevant.”
The beauty of bitcoin, in the eyes of its users, is its ability to transport great value across borders without the scrutiny of governments and law enforcement, earning the reputation of an asset to various criminals, terrorists and tax evaders.
Meanwhile, U.S. sanctions cutting off entities in Russia, North Korea, Iran, Venezuela, China and others from the world financial market have forced these countries to seek ways of avoiding the crippling effects of the sanctions and account freezes.
The increasing use of non-dollar currencies and cryptocurrencies, including the volatile bitcoin and a number of similar decentralized coins, has eroded confidence in the U.S. greenback’s previously unquestionable grip on world energy markets and global finance.
Frank Hu, chief executive of HBUS, a U.S. partner of the Singapore-based Huobi bitcoin and cryptocurrency exchange, told Forbes:
“Over the past few years, the digital asset and blockchain sector has faced massive shifts. Despite the volatile crypto markets, we’re seeing governments and businesses adopting blockchain technology at a rapid pace.”
Sherman, a California Democrat and proponent of sanctions who once derided cryptocurrencies as “a crock,” is now calling for the U.S. to prevent people from buying or mining cryptocurrencies. He continued:
“So whether it is to disempower our foreign policy, our tax collection enforcement or traditional law enforcement, the advantage of crypto over sovereign currency is solely to aid in the disempowerment of the United States and the rule of law.”
Bitcoin advocate and trader Anthony Pompliano wrote in a blog discussing Sherman’s attack, that a ban on bitcoin will likely strengthen the cryptocurrency. Pompliano explained:
“While many people will claim Brad Sherman doesn’t know what he is talking about, I would argue that his statement highlights that the Congressman knows exactly what is happening … He sees the increased probability that we are moving to a world where non-sovereign currencies are the default and it sounds like he is scared.
Mr. Sherman realizes that the United States, and other countries with major currencies, will lose considerable power if they are no longer in control. While his understanding of the technology’s potential is accurate, it appears that the Congressman does not understand the improbability of being able to ban ownership of these decentralized digital currencies. The laws could be created but they would be nearly impossible to enforce.”
In an interview with Bitcoin Magazine, former U.S. Congressman Ron Paul noted that, regardless of any moves to suppress bitcoin, the U.S. dollar faces a grim future. Paul said:
“He’s speaking for the deep state establishment, military people and everyone else in the banking system. He’s representing their position that ‘You don’t mess with the dollar.’ But I don’t worry about that because the dollar is going to self-destruct.”