An intriguing political trend is unfolding in the United States - Republicans are showing increasing support for cryptocurrencies, while Democrats, including President Biden and Elizabeth Warren, have taken an anti-crypto stance.
On the Republican side, notable figures like Ted Cruz and Mayor Suarez advocate for cryptocurrencies and the freedom to have full control over one's funds. In contrast, some progressives, despite their namesake, seem determined to resist progress and keep us confined to outdated practices and beholden to crumbling banks.
I want to clarify that this post is not intended to favor one political side over the other. Those who know me personally understand that I fall squarely in the moderate range of the political spectrum. However, this particular issue directly impacts everything I believe in, what I teach, and even my own financial well-being.
During the G7 Summit, President Joe Biden made it clear that he opposes a debt ceiling agreement proposed by Republican leaders, which reportedly includes provisions that could benefit crypto traders. In a press conference, Biden categorized these proposed terms as "unacceptable."
This is all while, White House economists issued a warning on Wednesday regarding the potential consequences of a prolonged debt default, emphasizing that it could result in the loss of over 8 million jobs and a 50% drop in the stock market.
TL;DR: In effect since 1917, the debt ceiling is the limit Congress has set on how much money the federal government can borrow to pay bills.
Even so, while attending the Group of Seven (G7) Summit, Biden reportedly classified Republicans' proposed terms as "unacceptable" during a press conference.
“I’m not going to agree to a deal that protects wealth tax cheats and crypto traders while putting food assistance at risk for nearly 1 million Americans.”
There is an ongoing discussion between the White House and Republican leaders regarding the alleged restrictions on tax-loss harvesting for crypto traders. According to the Washington Post, there are talks about blocking this mechanism for cryptocurrency transactions.
TL;DR: Tax-loss harvesting in the realm of cryptocurrencies is a strategy employed by investors to minimize their tax obligations. It involves selling a cryptocurrency at a loss in order to offset any capital gains made from profitable crypto investments. To claim a loss, the sold assets must be used to purchase a similar asset within a 30-day period, either before or after the sale. This mechanism is also applicable to stocks and other assets.
In addition to discontinuing tax-loss harvesting for cryptocurrencies, the White House has proposed a similar measure that would prevent investors from deferring taxes on real estate swaps. These changes, if implemented, are estimated to generate approximately $40 billion in tax revenue for the United States government.
America does not have a revenue problem
America's issue lies not in funding but in distribution. Californians in the highest tax bracket paying 53% while dealing with healthcare, education, crime, and homelessness raises concerns. In contrast, Canada's top tax bracket of 46% offers more services and a higher standard of living.
Republican House Speaker Kevin McCarthy shares this view, attributing the surge in U.S. debt to excessive spending, especially during the pandemic under the Biden administration.
The government historically favors those with contracts, implements favorable tax policies for the wealthy, and imposes disproportionately high taxes on the middle and working classes. Frustration drives the public to invest in meme-coins, seeking an alternative path. Taking an anti-crypto stance opposes the common people's interests, which the public is unlikely to support.
JFK Jr. For President?
Meanwhile, during his inaugural appearance as a presidential candidate at the Bitcoin 2023 conference, Robert F. Kennedy Jr., who is running for the Democratic Party nomination, made a groundbreaking announcement. He declared that he would become the first candidate in the history of the United States to accept campaign donations in Bitcoin. Kennedy Jr. expressed his admiration for the cryptocurrency, hailing it as a "symbol of democracy and freedom" during the event. This move marks a significant milestone in political fundraising and highlights Kennedy Jr.'s embrace of digital currencies in his campaign.
In his speech:
“Today, we show the world the power and the durability and the flexibility of Bitcoin. [...] Almost everyone in this room is aware of the link between Bitcoin and democracy and freedom. [...] They’re passionate because of the deep representation of a deep need that we have for liberty and democracy and the promise that this innovation has to guarantee those virtues."
As he challenges President Joe Biden, JFK Jr., has been actively sharing his libertarian perspectives on cryptocurrencies through his Twitter account. On May 3, he expressed his belief that crypto technologies serve as a significant catalyst for innovation, while criticizing the United States for impeding the industry's progress and inadvertently pushing innovation to other regions.
TL;DR: Kennedy Jr. is the nephew of the 35th President of the United States, John F. Kennedy.
By attending the Bitcoin event, RFK Jr. aims not only to engage with potential voters but also to tap into a potential source of substantial donations, potentially amounting to millions of dollars.
“Just as a biodiverse ecosystem is a resilient ecosystem, so too will our economy be more resilient if it has a diverse ecology of currencies, not just a single, centrally controlled one. We are seeing today how fragile our over-centralized system is."
The freedom to transact is as important as freedom of expression, says JFK Jr—and it was the reaction to the COVID-19 pandemic that brought him to this realization.
“Bitcoin is a bulwark against precisely this kind of government and corporate expansion and intrusion,” Kennedy said, referencing how the Canadian truckers had their bank accounts suspended. “As president, I will make sure that your right to hold and use Bitcoin is inviolable.”
One of Bitcoin’s biggest advocates on Capitol Hill, Sen. Cynthia Lummis (R-WY), returned again to the Bitcoin conference stage for a fireside chat with Chamber of Digital Commerce’s founder and CEO Perianne Boring about the U.S. legislative landscape surrounding Bitcoin.
Echoing support from the Republican side of the aisle, One of Bitcoin’s biggest advocates on Capitol Hill, Sen. Cynthia Lummis (R-WY):
“Bitcoin is something that is just so consistent with American values that we need to make sure it is protected, nurtured, and allowed to innovate here in the United States,” she said garnering applause from conference attendees.
Let’s Zoom Out
Cryptocurrencies, and Bitcoin, have entered the national spotlight during the presidential election, which is a monumental victory for our industry. Digital assets have transcended their previous status as niche and experimental assets. Bitcoin has truly arrived.
While we bicker about tax treatment for crypto traders, however, the use of the U.S. dollar is rapidly declining on a global state.
Recent data reveals that the yuan has surpassed the dollar as the most utilized currency for cross-border transactions in China. In March, cross-border payments and receipts denominated in yuan reached a record $549.9 billion, surpassing the previous month's figure of $434.5 billion. Countries in Asia, Africa, South America, and the Middle East are all pushing to de-dollarize.
The urgency for effective leadership to prevent America from losing its global leadership position is apparent. And the time to take action is now.
This Week By the Numbers 📈
Deal of the Week - Amini Tech 🚀
I'm thrilled to announce the successful completion of the Series Seed round for Amini Tech, one of the companies in my portfolio. Led by my dear friend Kate Kallot, this remarkable journey from concept to funding and monetization took a mere four months. Kate's exceptional leadership positions her as a standout founder to watch in the exciting realm of deep tech.
Amini, a Nairobi-based climate tech startup focused on solving Africa’s environmental data gap through artificial intelligence and satellite technology, has raised $2 million in a pre-seed funding round.
Pale Blue Dot, the European climate-focused venture capital firm that announced a $100 million fund last week, led the oversubscribed round. At the same time, Superorganism, RaliCap, W3i, Emurgo Kepple Ventures and a network of angel investors participated.
Click here for FULL Article in TechCrunch.
Top Stories 🗞️
FTX sues Sam Bankman-Fried, others in effort to recover $240M from Embed acquisition
FTX's new leadership team filed a series of lawsuits late Wednesday in an effort to recover some $240 million in connection with the cryptocurrency exchange's acquisition of stock trading platform Embed, which closed just weeks before FTX filed for bankruptcy. The plaintiffs in all three suits include FTX sister hedge fund Alameda Research and West Realm Shires (WRS) Inc., which is the corporate entity under which FTX US operated as a crypto trading company. The FTX debtors sued founders Sam Bankman-Fried, Nishad Singh and Zixiao "Gary" Wang, Embed founder Michael Giles and an array of Embed shareholders, claiming FTX can claw back the funds under bankruptcy law and that the funds for the acquisition came from Alameda and were misappropriated.WRS had purchased Embed with the aim of building its empire by providing FTX.US customers the ability to trade stocks on its platform in addition to crypto assets.
Texas proof-of-reserve bill passes through the Senate
Legislation that could require exchanges to maintain reserves “in an amount sufficient to fulfill all obligations to customers” has made it one step closer to becoming law in Texas. On May 15, the bill passed a vote in the state Senate and now awaits only the governor’s signature. Texas House Bill 1666, amending the Texan finance code, passed through the state’s House of Representatives earlier this year. Under the amendments, digital asset providers serving more than 500 customers in the state, with at least $10 million of customer funds, would be restricted from comingling the customer funds with any other type of operational capital, and using customer funds for any further transactions besides the original transaction demanded by the customer.
Hong Kong launches e-HKD pilot program, with 16 companies to test digital currency
Hong Kong has launched the trial run for a digital version of the local currency, called the e-HKD, paving the way for a virtual coin the public will be able to use to shop, dine out and make money transfers. Some 16 banks and payment companies will select small groups of their clients to test six potential uses for the e-HKD – online payments, payments in shops and restaurants, collecting government payouts, tokenised deposits, tokenised asset settlement and Web3 trading and clearing, according to a statement by the Hong Kong Monetary Authority (HKMA).
Iraq Bans US Dollar Usage to Boost Local Currency and Combat Black Market Rates
The Iraqi Ministry of Interior has implemented a ban on the use of US dollars in personal and commercial transactions within Iraq. The move aims to promote the use of the national currency, the Iraqi dinar, and combat the widening gap between the official exchange rate and black market rates, which has led to price increases. By limiting the use of foreign currencies, particularly the US dollar, the government aims to enhance the sovereignty and economy of Iraq. The decision to enforce the ban was driven by the need to address the widening gap between the official exchange rate offered by the government and the prevailing rates in the black market. This difference has been a major contributing factor to the rising prices of goods and services in Iraq. By promoting the use of the local currency, the government hopes to stabilize the economy, control inflation, and discourage the reliance on foreign currencies for day-to-day transactions.
Pakistani finance minister says crypto will never be legal
Pakistan will ban cryptocurrency services operating in the country and never legalize crypto trading, Minister of State for Finance and Revenue Aisha Ghaus Pasha said at a session of the Senate Standing Committee on Finance and Revenue on May 16, according to multiple local media reports. Other officials, including State Bank of Pakistan (SBP) Director Sohail Jawad, spoke in favor of the decision. Pasha said banning crypto was one of the requirements set by the Financial Action Task Force (FATF), which removed Pakistan from its gray list in October. The gray list contains countries the body considers deficient in Anti-Money Laundering and Counter-Terrorist Financing measures but that are working with it to remedy their shortcomings.
Product of the Week 😋
This week I’m excited to share with you a company founded by a dear friend Brandon Hiemstra - House of Macadamias (HOM).
As a long-time reader, you know I don’t share anything here that I don’t consume myself.
Many of us are already integrating nut products such as almonds and cashews into our daily diet, but did you know that Macadamias are lower in net carbs than most popular nuts (33% less than almonds and 50% less than cashews) and have arguably the best fat profile of any nut (almost like avocado on steroids!) This is what we call a monounsaturated fat for the ultra-healthy Mediterranean diet.
For the beauty minded… Macadamias support collagen production, glucose metabolism, and reducing inflammation, and have been linked to longevity and fat loss.
Formerly known as the most expensive and rarest nuts (only 1% of the nut market and grows in very few climates), Macadamias have been hard to come by. HOM is changing this, having vertically integrated with 90+ farmers in rural South African communities.
Endorsed by Tim Ferriss and Joe Rogan, HOM products have no added sugar or artificial ingredients - choose from hand-sorted, macadamia bars, creamy nut butter, and cold-pressed Extra Virgin macadamia oil, perfect for cooking given its high smoke point and buttery flavor.
For a very limited time, HOM is gifting our readers a free box of Namibian Sea worth $35 plus 20% off your entire order with code MYTH20.
Thank you for reading this week’s edition of the Myth of Money.🚀
Until next week,
About the Author: Tatiana Koffman
Hi there and thanks for reading! If you stumble upon my newsletter, you will notice that I write about money, economics, and technology. I hold a JD/MBA and spent my career in Capital Markets working across Mergers & Acquisitions, Derivatives, Venture Capital, and Cryptocurrencies. I write to make financial topics more accessible and create equal opportunity for the next generation of investors. I have personally invested in 20+ companies and funds (👉 my portfolio).
At the end of the day, whatever is decided when it comes to crypto loss or gain reporting by federal law, once reporting becomes mandated and done as with any other brokerage account, part of the benefits of Crypto go right out the door. Having to report your holdings to the IRS automatically makes what was an anonymous investment no longer anonymous. The only way crypto currencies succeed is staying out of the system entirely. Once regulatory capture occurs, the government will destroy the very benefits that made Crypto appealing.