In today’s edition of Bitcoin in Brief, “U.S. person” Phil Potter, Chief Strategy Officer at crypto exchange Bitfinex, is departing the company as it pivots away from the United States. In America, the Supreme Court mentions Bitcoin and cowrie shells in the context of money. On Capitol Hill, congressmen have been warned to disclose their crypto holdings, while a Republican Rep. calls for “light touch” ICO regulations.
Chief of Strategy Leaves Trading Platform Bitfinex
Phil Potter, the Chief Strategy Officer of Bitfinex, is leaving his post at the exchange, Reuters reported quoting both him and the company. Potter will be replaced by Chief Executive JL van der Velde, Bitfinex announced. Speaking of new opportunities he did not specify, Potter stated:
As Bitfinex pivots away from the U.S., I felt that, as a U.S. person, it was time for me to rethink my position as a member of the executive team.
Bitfinex, currently the fourth-largest cryptocurrency exchange by trading volume, is owned by a company based in the British Virgin Islands. The platform offers traders the opportunity to buy and sell cryptocurrencies such as bitcoin and ether. In April, Bitfinex also introduced trading for 12 altcoins.
The exchange shares management with Tether Limited, the company that issues the Tether token (USDT) which, according to its developers, is pegged to the U.S. dollar. The claim, however, has been contested by critics who doubt the company holds $1 USD in reserve for every minted coin.
According to a research paper by the University of Texas, Tether may have been used to manipulate the price of bitcoin last year – an allegation that Bitfinex rejects. An investigation opened by the U.S. Justice Department into possible manipulations is believed to be one of the main reasons for the recent crypto market losses.
US Supreme Court Mentions Bitcoin
Since the announcement of the US DOJ probe, several other interesting developments have been reported in the U.S. In a ruling not directly related to cryptocurrencies, the Supreme Court of the United States mentioned Bitcoin, arguably for the first time. The dissenting opinion in the Wisconsin Central Ltd. v. United States case, authored by Justice Stephen Breyer, puts forward the first cryptocurrency as an example of how views regarding money are changing over time.
The case is centered on a taxation dispute stemming from the government’s assertion that the railroad company’s stock option payments to its employees represent “money remuneration” and should be taxed, while Wisconsin Central and its workers claim the opposite. The majority opinion, written by Justice Neil Gorsuch, supported the company’s view in a 5-4 vote stating that stock options were not money and could not be subject to taxation under the Railroad Retirement Tax Act of 1934.
However, the dissenting opinion, authored by Breyer and backed by three of his colleagues, argued that the stock options were in fact money remunerations. Justice Breyer specifically refers to Bitcoin, stating that “[…] what we view as money has changed over time. Cowrie shells once were such a medium but no longer are […]; our currency originally included gold coins and bullion, but, after 1934, gold could not be used as a medium of exchange […]; perhaps one day employees will be paid in Bitcoin or some other type of cryptocurrency […]. Nothing in the statute suggests the meaning of this provision should be trapped in a monetary time warp, forever limited to those forms of money commonly used in the 1930’s.”
US Congressmen Advised to Disclose Crypto Holdings
The members of the House of Representatives will have to disclose information about their investments in bitcoin and other cryptocurrencies. The obligation covers holdings of more than $1,000 in US dollar equivalent, according to an announcement issued last week by the Committee on Ethics of the congressional lower house. The “Memorandum to All House Members, Officers and Employees” reads:
In particular, the Committee has determined that with respect to financial disclosure, cryptocurrencies will be treated as an “other forms of securities” and are therefore subject to reporting both on a financial disclosure filer’s annual Financial Disclosure Statement (FD Statements or Statements) and on Periodic Transaction Reports (PTRs) throughout the year.
The Committee also recommends, “due to the evolving nature of cryptocurrencies,” that anyone with questions about digital currencies or intentions to participate in Initial Coin Offerings (ICOs) contact the Committee for guidance prior to investing. In addition, House members are now obliged to report, within 45 days, any transactions with crypto assets, again in excess of $1,000 USD, The Wall Street Journal reported.
Congressman Calls for Light ICO Regulations
Speaking of crypto investments and the Capitol, a call was issued last week to adopt a “light touch regulatory framework” for the young crowdfunding industry. In an interview with CNBC, Rep. Warren Davidson (R-OH) said: “We want to make sure that the United States’ capital markets stay strong and vibrant, and one of the ways to do that is to provide regulatory certainty.”
Davidson, who is a member of the House Financial Services Committee, said lawmakers have been working with representatives of the industry, including regulators, to determine how regulations should be shaped in order to drive capital. He also noted that “right now there are concerns that there is a regulatory arbitrage going on” and that “everything starts looking as a security to a securities’ regulator.”
The congressman also shared concerns that without coherent regulations the ICO sector in the U.S. may end up being regulated by a disparate patch of court rulings. “We want to protect that market,” Warren Davidson emphasized.
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