Colorado is looking to become the latest state to allow political contributions denominated in bitcoin and other digital currencies.
“The donations – whether in bitcoin or another digital currency – would be subject to the same state limits as a cash donation, and the value would be determined at the time of the donation,” reports The Denver Post.
The Federal Election Commission (FEC) previously approved political contributions in the form of bitcoin.
“Bitcoins may be received into and held in a bitcoin wallet until the committee liquidates them. Holding bitcoins in a bitcoin wallet does not relieve the committee of its obligations to return or refund a bitcoin contribution that is from a prohibited source, exceeds the contributor’s contribution limit, or is otherwise not legal,” according to the FEC. “A political committee that receives a contribution in bitcoins should value that contribution based on the market value of bitcoins at the time the contribution is received.”
Colorado’s move to consider crypto-based political donations comes just ahead of the 2018 mid-term elections. In November, all of Colorado’s statewide executive offices will be contested as well as the states seven seats in the U.S. House of Representatives. The state’s Democratic and Republican primaries will be held on June 26th. There is not a U.S. Senate race in Colorado this year.
In the 2016 presidential election, Hillary Clinton beat Donald Trump in Colorado by 4.9%. New Hampshire was the first state to permit crypto-based political donations, having done so starting in 2014.
A Democratic candidate for governor in Colorado previously accepted a bitcoin donation in 2016 when he was running for a House seat while a Republican senate candidate in Missouri accepted a bitcoin donation in late 2017, valued at $4,500 at the time, according to the Denver Post.
“It is recommended to include a notation or memo text indicating the number of bitcoins that the committee received and that the bitcoins were not liquidated,” according to the FEC.
Colorado has a comment period running through May 23rd regarding the bitcoin proposal.
Only 1.3 million Bitcoin are left in circulation on cryptocurrency exchanges!
Christmas is coming, and Bitcoin (BTC) scarcity is at historically low levels. CryptoRank announced in a recent tweet that just 6.3% of the overall Bitcoin supply, or 1.3 million BTC, are kept on cryptocurrency exchanges.
The decreasing amount is nothing new; it’s been steadily declining since the Bitcoin halving in 2020, when the BTC block reward was cut in half. The supply of BTC on exchanges has also decreased gradually over the past year, trending downward. On October 2020, exchange wallets made up 9.5% of the BTC supply, just before the all-time highs at Christmas time, and 7.3% in July 2019. In December 2021, the 6.3 percent figure is a record low.
However, the dominance of Coinbase’s BTC wallet is also falling. The American exchange used to store more bitcoin than all other exchanges combined. Over the past year, its domination has decreased from 50.52% to 40.65%.
Following a spate of good price statistics that tie into the rising price of Bitcoin, the announcement has sparked further excitement among investors. First and foremost, owing to the fact that BTC output is shifting from a “liquid” to an “illiquid” state, monthly BTC production has frozen at 100,000 BTC. In other words, more BTC is stored in cold storage than is being mined.
Additionally, it’s crucial to remember that many retail investors and several firms keep their BTC on exchanges, demonstrating that the “illiquid” BTC category may be even smaller. Instead of keeping their BTC in cold storage, some Bitcoin holders would entrust it to exchanges instead of leaving custody of their keys with them.
Surprisingly, Binance CEO and co-founder Changpeng Zhao has encouraged hot wallets, despite the best efforts of Bitcoiners like Andreas Antonopolous to the contrary: “Not your keys, not your bitcoin.” is part of everyday BTC mantra.
This may lead to the situation in which 1.3 million BTC is “stored” on exchanges, but they are not “circulating,” and they certainly do not contribute to the liquidity problem.
Despite calls for a “Santa Rally” on the back of strong analytics, the bears are not yet out of the woods. A tweet from BullRun Invest using Glassnode data showed that 24.6% of all BTC supply is sitting above $47,000.
According to the report, close to a fourth of the BTC purchased at those prices levels are now underwater. If BTC fails to make progress into the 50s, there may be fewer gifts under the tree tomorrow.
U.S. Takes Crypto Crime Seriously with Anti-Money Laundering Reforms
The United States passed into law its Anti-Money Laundering Act of 2020, which takes effect on January 1, 2021. This brings digital currency exchange companies and other digital-asset-related businesses under the scope of regulations of the Bank Secrecy Act (BSA), which requires financial institutions “to actively detect, monitor and report potential money laundering activity.”
“I’m pleased that our anti-money laundering legislation was included as a part of this year’s [National Defense Authorization Act]. This bipartisan legislation protects Americans by depriving criminals and terrorists of the tools they use to finance illicit activity. It is the first serious overhaul of our anti-money laundering system in decades, and it makes sense to include it in the biggest, most important national defense legislation Congress passes each year,” South Dakota Sen. Mike Rounds said in a press release.
The massive anti-money laundering reforms are targeting businesses dealing with digital currencies and assets by clearly specifying the definition of a “financial institution” to “‘a business engaged in the exchange of currency, funds, or value that substitutes for currency or funds” and “a licensed sender of money or any other person who engages as a business in the transmission of funds or value that substitutes for currency.”
The reforms further define a “money transmitting business” to include those who deal with “currency, funds, or value that substitutes for currency.” Now, there are no longer loopholes that digital asset companies can use when dealing with the Financial Crimes Enforcement Network (FinCEN), the agency that enforces the BSA.
Stricter Penalties Enforced
Aside from updating definitions to ensure that digital currency exchange firms and others dealing in digital assets are clearly within the scope of the AML Act of 2020 and the BSA, stricter penalties are now being enforced for crypto criminals.
Now, those who have been found guilty of violating the AML Act of 2020 and/or BSA are faced with fines amounting to profits earned while committing the violation and possible jail time. Those guilty of an “egregious” breach are also going to be banned from taking a board member position of any financial institution in the country for 10 years. Furthermore, employees of financial institutions who commit these crimes will be obligated to return to their employer all bonuses received during the time the act was committed.
FinCEN is being given additional resources, like increasing its manpower, to ensure the enforcement of these reforms. This will further safeguard investors against crypto crimes and nail down digital currency exchange firms and other digital-asset-related businesses that do not comply with BSA regulations.
Bitcoin (BTC) Crosses 55k And Is Heading Towards 60k Fast!
Less than two months into 2021, the price of bitcoin has risen 95.4%.
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