Congressman Brad Sherman, D-California, believes the government should prohibit U.S. citizens from mining and using cryptocurrencies. He made the statement during the Wednesday, July 19, hearing of a subcommittee for the House of Representatives Financial Services Committee, adding that as a medium of exchange, cryptocurrencies accomplish nothing except facilitating narcotics trafficking, terrorism, and tax evasion.
“Some of its supporters delight in that if you can disempower the U.S. government from being able to prevent terrorism, narcotics trafficking, and tax evasion, you have somehow struck a blow for liberty,” he said during a five-minute statement. “That is reason enough to ban it.”
Part of his argument is that mining alone requires large amounts of power that takes away from other needs and/or adds to the current power footprint. Its role as an investment is also deemed “bad” as instead of gambling in Las Vegas — which in turn feeds casinos, restaurants, and hotels that pay high local taxes — “animal spirits” are gambling on virtual coins, helping to create a market for tax evaders, terrorists, and so on.
That said, he believes these gamblers should invest in risky stock instead. More importantly, if U.S. citizens purchase cryptocurrencies, investor protection needs to be in place as the U.S. Securities and Exchange Commission suggested in March. He went on to add that any person or firm selling stocks, bonds, or any other investment should be charged with fraud and incarcerated for issuing crypto-offering memoranda and crypto-registrations.
“The money that we make as a country because we’re the reserve currency, because we can issue a greenback that does not yield interest, there are people who are alive today because of the profits the U.S. government makes on that whether it be to fund our defense or medical research,” he concluded. “All of that gets diminished with cryptocurrency.”
But Norbert Michel, director for the Center for Data Analysis at the Heritage Foundation and one of four on the panel, argued against the notion to ban cryptocurrency. Sure, criminals use Bitcoin, but they also use other tools for their devious deeds such as airplanes, computers, and automobiles. We don’t criminalize those tools simply because they’re used by criminals. Why is cryptocurrency any different?
More importantly, cash is still the most-used currency across North America. But U.S. citizens also use a form of digital currency: Electronic payments. For instance, a worker could get a direct deposit into his bank, never seeing cash or a physical check. He then purchases goods from Amazon with his bank card, again not using physical money. Cryptocurrency is just a new form of electronic payment that should be embraced and treated like any other form of payment.
Also brought up during the hearing was the idea of central banks issuing their own digital currency. Alex Pollock from the R Street Institute refuted the idea, as these banks would compete directly with the Federal Reserve. Having central banks issue digital currencies is “one of the worst financial ideas of recent times,” he said.