The most interesting implications of the collision of traditional political institutions with the crypto space is the way it can expose the lack of cohesion in power systems that otherwise appear monolithic. Digital assets exist in a parallel dimension of policy where there is no centralized consensus or clear guideline. This creates a wide range of opinions and voices that are not coordinated politically. Russia’s central bank attempted to push a hardline cryptostance, which led to a lively policy debate last week. It is rare to see such a public, interagency disagreement over substantive issues.
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Russia: Conflicting visions
It was discovered that the Ministry of Finance had been developing its own crypto regulatory framework since the beginning, which is fundamentally in opposition to the Central Bank of Russia’s ban. The ministry’s proposal is to use the traditional banking system’s railways to facilitate cryptocurrency payments. It also proposes categorizing investors according to their qualifications and introducing financial surveillance systems. Dmitry Medvedev, the former President and Prime Minister of Russia, offered his support for regulation rather than a blanket ban.
The narrative war over how to deal the digital asset space’s power is evidently underway in the Russian government. Its final outcome is unknown.
Tag along with Omnibus Bills
The inclusion of the problematic definition of digital asset broker into the infrastructure bill last fiscal year was the first test. Now, crypto opponents could use the tactic to stealthily attach crypto-hostile provisions and massive bills to their advantage. Crypto advocates discovered a clause in the America COMPETES Act that could allow the Treasury Department, bypassing existing checks and the logic behind due process, to take “special measures” against certain financial transactions including cryptocurrency. These measures could be used to prohibit financial institutions from offering certain products or services, or to enforce surveillance.
Spot BTC ETF will not be passed
It is no surprise that the U.S. Securities and Exchange Commission has taken a principled stand against exchange-traded funds offering direct exposure to cryptocurrency. This is why its rejection last week of another spot ETF is not surprising for anyone who is interested in this area. The regulator prefers to push such deadlines back as long as possible.
However, some analysts see this as part of the executive’s overall crypto regulatory strategy and not a single agency policy. Eric Balchunas, a Bloomberg senior ETF analyst, stated on Twitter that the SEC’s position on spot Bitcoin ETF is in line with the Biden administration’s rumored executive order that would label cryptocurrencies a national security risk.