The Federal Election Commission allows political contributions in Bitcoin. In July 2020, the U.S. Office of the Comptroller of the Currency declared that national savings banks and federal savings associations can custody currency for bank customers. Acting Comptroller Brian Brooks said, “This opinion clarifies that banks can continue satisfying their customers’ needs for safeguarding their most valuable assets, which today for tens of millions of Americans includes currency. From safe-deposit boxes to virtual vaults, we must ensure banks can meet the financial services needs of their customers today.”
Already, states allow businesses to pay their taxes in Bitcoin; Ohio was first.
Central banks are paying attention to this technology, too. Countries worldwide are testing CBDCs – Central Bank Digital Currencies – as potential replacements for paper money. China is testing the digital yuan and Sweden is testing the e-krona, while the Bank of England (Britain’s version of our Federal Reserve) which says blockchain “could transform the financial system,” awarded a $200 million contract in August 2020 to Accenture to build a settlement service that can support a central bank digital currency.
In June 2020, the European Central Bank: despite saying it sees no “business case” for launching a digital currency, acknowledged it is looking into how one would work. “The lack of a concrete ‘business case’ for a CBDC at present should and does not stop us from seriously exploring the design of a digital currency so we will be well prepared should we ever take that policy decision, ECB says.
In July 2020, the Banque de France, France’s central bank, placed 40 million euros of bonds on a public blockchain, settling the transaction instantly using digital euros. The central bank now says it’s doing a trial for a digital currency and has awarded a contract to Accenture and HSBC to build a settlements platform.
In August 2020, the Bank of Japan appointed its top economist to oversee research on developing the country’s CBDC. And Russian President Vladimir Putin signed legislation allowing companies to issue digital securities on the blockchain if they are registered with the Bank of Russia. Pending legislation will regulate those businesses.
The first was central-bank research paper on CBDCs was written in 2016; the Bank for International Settlements has been tracking the papers and in July 2020 said that, for the first time, more papers are positive than negative. BIS in December 2019 said 1 in 10 central banks will offer digital currencies within 3 years.
Also in August 2020: Congressman Tom Emmer of Minnesota said he expects bitcoin to rise as the world emerges from the coronavirus crisis. “Bitcoin isn’t going away,” he said in an interview. Bitcoin and cryptocurrencies are going to “continue to become more and more important. [Bitcoin is] going to get stronger. You just watch, it has value, when something has value, people are going to take risks and it’s going to advance. I think we’re just moving into that next phase, which is why crypto, the area, excites me.”
In September 2020, Wyoming gave crypto exchange company Kraken a bank charter that’s recognized under federal and state law. Kraken Financial has thus become the first regulated U.S. bank to provide comprehensive deposit-taking, custody and fiduciary services for digital assets. Customers can bank seamlessly between digital assets and national currencies. They can pay bills and receive salaries in cryptocurrency, and incorporate digital assets into their investment and trading portfolios.
In September 2020, Former Acting White House Chief of Staff Mick Mulvaney has joined the board of the Chamber of Digital Commerce. Visa and Goldman Sachs are joining its Executive Committee. The Chamber represents the digital asset and blockchain industry, educating policymakers and advocating for policy clarity in the U.S. Mulvaney joins other leaders like Chris Giancarlo, former chair of the Commodity Futures Trading Commission, and Blythe Masters, former head of global commodities at J.P. Morgan are also on the board.
October 2020: The Bahamas launches a central bank digital currency in October, called the Sand Dollar. Each Sand Dollar is equivalent to one Bahamian dollar, which is pegged to the U.S. dollar. The country’s central bank says a portion of the islands’ population is excluded from the current banking system because of remoteness, stringent Know Your Customer regulations and the closure of traditional bank branches in recent years. The government believes a digital currency will benefit its citizens and the nation’s economy. For example, bank branches are often closed for weeks or months following hurricanes, and COVID-19 has created the need for contactless digital payments and the elimination of human clustering at banks.
And in the category of “if you can’t beat ‘em, join ‘em”, the IRS in August 2020 released its revised Form 1040 for the 2020 tax year. After you provide your name and address, the very first question you’re asked is, “At any time during 2020, did you receive, sell, send, exchange, or otherwise acquire any financial interest in any virtual currency?” The IRS wouldn’t ask the question – let alone give it such prominent placement on Form 1040 – unless millions of Americans are likely to answer “yes.”