American Venture Capital A16z recently released its 2024 Crypto Annual Report, which highlighted that cryptocurrency and regulatory policies were hot topics during the US election. The following report provides an extended analysis of the significant changes in cryptocurrency regulations by the US government.
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Bitcoin and Ethereum ETFs officially recognized by the government
Wyoming passes DUNA Bill, opening up new tax-saving opportunities
FIT 21 Bill brings transparency to political donations
On January 10th of this year, the US SEC officially approved Bitcoin ETPs (Exchange-Traded Products, the official registered name for ETFs). On July 24th, Ethereum ETPs were also issued. The issuance of ETPs did not immediately stimulate the prices of BTC and ETH. However, it symbolizes that cryptocurrencies and digital assets have been recognized by mainstream institutions and can be legally invested under government regulations.
Governor Mark Gordon of Wyoming signed the DUNA Bill on March 7th.
The significance of the passage of the DUNA Bill is not only the expression of Wyoming’s supportive stance towards blockchain startups but also provides a solution to the challenges faced by decentralized organizations and even reinterprets the innovative structure of DAOs.
The new structure of DAOs, called “Decentralized Unincorporated Nonprofit Associations” (DUNA), allows DAOs to maintain their decentralized characteristics under legal compliance. DAOs have always been seen as a new variant between corporations and nonprofit organizations. Interestingly, the DUNA Bill includes an important agenda; DUNA can be converted into a limited company and can acquire, hold, and transfer real estate in the name of DUNA. It can also operate for profit while maintaining its “nonprofit organization” status.
As early as 2017, the SEC recognized that although DAOs are decentralized organizations, they cannot be exempted from being registered securities. The SEC believes that as long as securities (or shares) are issued and registered in the United States, regardless of whether they are subscribed in US dollars or cryptocurrencies, they should be subject to US securities laws.
The Commodity Futures Trading Commission (CFTC) has a similar view on DAOs. The CFTC believes that DAOs cannot be treated as legal entities but rather as a group of individuals. DUNA, through the form of DAOs, transforms into an unincorporated nonprofit organization.
Wyoming, which has historically supported the Republican Party and Trump, is home to many hidden billionaires despite its small population of only 560,000 residents. There are many discussions online trying to unravel the mysterious reasons why billionaires are attracted to this barren land still stuck in the wild west cowboy era. The wealthy in Wyoming are not locals but immigrants from other places. The state is full of desolate towns with no one around except for barren mountains and open land, where skiing is possible in winter. Since the start of the pandemic, a large number of people who moved from New York and Los Angeles have been heavily investing in real estate.
According to Wyoming’s blockchain report, since 2016, the state legislature has enthusiastically embraced blockchain and cryptocurrencies and has been committed to promoting support for blockchain. It was the first state to support the Token Taxonomy Act.
Virtual currency mining company Elite Mining Inc. relocated to Cheyenne, the capital of Wyoming, in 2021. Elite Mining is reportedly engaged in renewable energy mining.
Interestingly, in the Google Trends report compiled by A16z, the number of searches by Wyoming residents for Bitcoin and Ethereum has not increased but rather decreased, indicating that Wyoming residents seem to have understood the principles of Bitcoin long ago. In the United States, each state has local autonomy, and Wyoming may become a popular area for registering DUNAs next year.
In May 2024, both the Democratic and Republican parties supported the passage of the FIT 21 Bill (21st Century Financial Innovation and Technology Act). The bill aims to provide clear and transparent regulation for cryptocurrencies, protecting financial entrepreneurs or investors from financial harm and preventing future sanctions and lawsuits by the SEC.
The FIT 21 Bill, passed before the US presidential election, also has another important significance. According to Reuters, recent data shows that half of the political donations made by companies to political parties come from cryptocurrency companies. On May 22nd, the US House of Representatives passed the proposal, with support from companies such as Coinbase, The Block, and Digital Currency Group. It aims to bring transparency to political donations ahead of the general election and reduce the potential troubles of being reviewed by the SEC and CFTC after the election.
21st Century FIT Act
A16z 2024 Crypto Report
DAO
Decentralized Unincorporated Nonprofit Associations
DUNA
Elite Mining
Wyoming