- We’ve entered a new, uncharted phase of adoption, with state legislators attempting to recognize bitcoin as legal tender in the United States.
- Is it possible for individual states in the United States to recognize bitcoin as legal tender currency?
Arizona State Senator Wndry Rogers appears to believe so, based on the bill (SB 1341) she drafted and introduced late last month to make bitcoin legal tender in the state. Meanwhile, Texas Governor Candidate Don Huffines has stated that if elected, he will recognize bitcoin as legal tender.
However, while there is growing interest in state leaders adopting bitcoin in this manner, there may be some challenges. Specifically, the first clause of Article One of Section Ten of the United States Constitution. Constitution:
“No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make anything other than gold and silver coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts; or grant any Title of Nobility.”
As of now, it appears that individual states lack the capability and power to establish a new acceptable form of legal tender within the Union of the United States. That’s a bit of a bummer. However, it is clear that we are making significant progress in the mainstream acceptance of Bitcoin, which has piqued the interest of American politicians and legislators and is spreading like wildfire.
“The key piece here is not whether it will pass or what impact it will have in Arizona,” Dennis Porter, a podcaster who focuses on the intersection of Bitcoin and politics, explained. “The true impact of this bill is the fire it has started.”
Other states and legislators are now considering this as a possible option for their state to protect itself from a rogue federal government.”
GAME THEORY IN ACTION
It also means that Bitcoiners as individuals must be more cautious and skeptical of what our politicians claim and promise. The game theory that we have been discussing in our circles for years is almost exactly playing out: politicians and other public figures are realizing the power of garnering support from the Bitcoin community. Not only because of the excitement surrounding price action, but also because of the sheer size of the voting population within the borders of the United States. This voter base crosses all party lines, and anyone can garner support from any angle.
“States must begin adopting Bitcoin immediately so that they can begin the process of protecting themselves from the federal government disconnecting them from the overly powerful national financial system,” Porter said. “Adopting Bitcoin is a win-win situation for any state.” It gives them greater control over their future.”
PERCEPTION CHANGE IN D.C.
Another recent development at the intersection of Bitcoin and politics is a bill introduced in the United States. On February 3, 2022, Representatives Suzan DelBene of Washington and David Schweikert of Arizona will introduce legislation in Congress.
This bill seeks to establish a “workable structure for taxing purchases made with virtual currency,” such as bitcoin. One of the most significant barriers to bitcoin adoption by the general public is its inability to be used as a currency for routine purchases, as it is taxed more closely as a stock or other long-term investment in the United States.
DelBene and Schweikert hoped to alleviate this bottleneck by providing a tax exemption for the use of bitcoin as a currency where capital gains were less than $200.
“It’s a great way to normalize the whole ‘track your buys under $600 thing,” said Ant, the pseudonymous author of Timechain Stats, a Bitcoin blockchain data dashboard. “Accounting is a nightmare, and hardly anyone knows their cost basis.”
However, as national politicians attempt to normalize and increasingly regulate bitcoin use, even if the regulation is intended to increase adoption, the project’s status as something parallel to and outside of the national system will inevitably be called into question.
“Most importantly,” Ant warned, “bills like this will end up doxxing a lot of bitcoiners, both directly and indirectly.”
While a bill like DelBene and Schweikert’s may appear to be a boon to some individuals who receive a portion of their salary in bitcoin, it also provides a stepping stone for potential abuse of financial surveillance powers not only immediately, but also in the future. This is a major concern for many in the Bitcoin community.
Bitcoiners should be wary of how quickly these social and powerful figures are flocking to this revolutionary asset. It is incumbent upon all of us to pause, catch our breath, and reflect before one of two potential scenarios plays out:
One, we rush to regulate an asset that is widely misunderstood, putting obstacles in the way of those we seek to protect. And two, we rush to support and uplift politicians who hoist the Bitcoin standard in order to reach asset regulation before the regulatory windfalls are well gauged or we have established understanding, in order to avoid inviting weakness within the system itself.
We live in a fast-paced world, but we don’t have to break things. Being a slow mover can be a blessing, not a curse, when it comes to state adoption.
Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.