Mar 28, 2022
A short one this week as it’s my birthday weekend and I should spend it with my family rather than bloviating here. If you’d like to do something nice for my birthday, please consider forwarding this to a friend who may be interested or sharing it with your followers. Word of mouth is what grows this newsletter and growth is what keeps me writing it :)
The “big news” from last week was that Sen. Kirsten Gillibrand (D-NY) and Sen. Cynthia Lummis (R-WY) announced at a POLITICO fireside chat that they were working together on a comprehensive crypto bill. Ahead of the event, the buzz had been that Sen. Lummis would be announcing a democratic co-sponsor for the bill that she has been previewing since at least December and that earlier this month she said she was “putting the final touches” on and was “almost ready.”
What struck me about the event was that Sen. Gillibrand repeatedly referred to the effort as a nascent one. She said, “We’re really at the beginning of the process in terms of writing legislation, but also talking to stakeholders, talking to regulators, talking to industry experts so that all voices are part of this legislative process.” What this tells me is that while she’s signing on to work with Sen. Lummis on a bill, it doesn’t sound like she’s signing on to co-sponsor the bill that Sen. Lummis has already drafted.
That makes perfect sense. If she’s going to be the lead co-sponsor of a comprehensive bill to regulate a whole industry, Sen. Gillibrand will no doubt want to co-author it from the ground up after consulting widely with stakeholders. That seems to be a process that’s starting now.
What’s great about Gillibrand joining Lummis in this effort is not only that she makes it a bipartisan affair, but that she sits on the Agriculture Committee, which oversees the CFTC and will have jurisdiction over the bill. Lummis sits on the Banking Committee. You’ll need bipartisan buy-in from both committees for the bill to have legs.
Bitcoin for Oil and Gas?
With the “crypto can help Russia evade sanctions” stories dying down, a different narrative exploded last week: Russia plans to accept Bitcoin in payment for oil and gas exports.
All of the stories reporting this are sourced to a single statement made by Pavel Zavalny, chair of the energy committee in the Russian Duma. When you see his full statement, however, it’s clear his reference to Bitcoin was a throwaway line:
“When it comes to our ‘friendly’ countries, like China or Turkey, which don’t pressure us, then we have been offering them for a while to switch payments to national currencies, like rubles and yuan,” Zavalny said during the press conference. “With Turkey, it can be lira and rubles. So there can be a variety of currencies, and that’s a standard practice. If they want bitcoin, we will trade in bitcoin.”
His meaning, clearly, is that they’ll trade in whatever is convenient for the ‘friendly’ buyers (while ‘unfriendly’ nations must pay in Rubles). Even though it’s certainly significant he said Bitcoin and not gold or something else, there was in reality no announcement that Russia is accepting, or proposing to accept, or even seriously considering using Bitcoin in any systematic way.
We’re in uncharted waters these days, so who knows, it could happen, but I doubt it’s likely. Assume Russia accepts Bitcoin for oil and gas, what does it do with the Bitcoin then? What Russia wants to do with export revenue is spend it on imports that it needs, primarily from China. Bitcoin, of course, is banned in China, so I doubt Russia is going to find many in China willing to accept it. Well, one might think, they can convert into another currency before spending it, but of course that’s going to be difficult if not impossible given the sanctions in place. And more to the point, if they are going to end up with another global currency like dollars, euros, or yuan, why not just accept that in the first place?
DeSantis is Cool with Crypto
An item that in my view got less attention than it warranted is that Florida Gov. Ron DeSantis announced he’s in support of the state accepting cryptocurrency for tax payments.
What’s relevant is not the fact that Floridians may be able to pay taxes with Bitcoin. Ohio became the first state to accept Bitcoin for taxes under then-state-treasurer Josh Mandel and it was a total flop, with “fewer than 10 transactions in just under a year of operation.”
What’s eye-catching is just the fact that DeSantis is clearly A-OK with crypto. According to polls he is the preferred candidate for the 2024 Republican nomination for president after Donald Trump, who’s been hostile to crypto. Crypto may end up with a binary choice in the Republican presidential primary.
Various and Sundry
Worker and Parasite is a bi-weekly book discussion podcast I do with Stan Tsirulnikov and on the latest episode we talk about The End of History and the Last Man by Francis Fukuyama. Agree with it or not, the book is a masterpiece, and I think this is one of our best episodes. You can listen and subscribe here.
On March 30 at 4 p.m. I’ll be speaking on a panel discussion titled “Crypto and National Security: How to Validate American Innovation and Verify U.S. National Security” and hosted by the National Security Institute at the Antonin Scalia Law School at George Mason University. Other panelists are Sheila Warren of CCI and Juan Zarate of K2 Integrity. It will be moderated by Laura Shin. You can register to watch online here.