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The Stand with Crypto Alliance PAC has recently gained a lot of momentum with over 1 million members signing on. Additionally, crypto is becoming more of a political issue as it is already influencing the 2024 presidential election with both Trump and Biden's campaigns showing a keen interest in the sector. In the UK, upcoming elections are delaying crypto regulations, while Turkey is opting for a smalll transaction levy on crypto and stock trading instead of heavier taxes.
Crypto PAC Gains Momentum
The Stand with Crypto Alliance political action committee (PAC) that was launched by Coinbase recently announced that more than 1 million Americans have joined. According to the pro-crypto PAC, 52 million Americans hold at least some form of cryptocurrency, and 87% of surveyed Americans believe that the current financial system needs an overhaul. Interestingly, 45% indicated they would not vote for an anti-crypto candidate.
A core focus of the Stand with Crypto PAC is the passage of the "Financial Innovation and Technology for the 21st Century Act" (FIT21). This bill plans to develop a regulatory framework for cryptocurrencies and digital assets in the United States. It recently passed in the House of Representatives with a 278-136 vote and received a bit more support from Republican lawmakers, with 200 voting in favor compared to 70 Democrats.
This is still a very impressive feat in a typically divided D.C. landscape. However, the bill still needs to pass in the Democrat-controlled Senate, where it faces serious opposition from crypto critics like Elizabeth Warren.
It is not just the everyday American that is starting to warm up to crypto. The rise of crypto as a political issue is already influencing the 2024 presidential election. Former President Trump recently and expressed support for the crypto industry. He believes it is extremely important for the U.S. to embrace innovation or risk falling behind globally. This stance contrasts with his previous opposition to Bitcoin and cryptocurrencies.
After Trump's comments, Joe Biden's campaign also reportedly reached out to industry players to gather input for the administration's future crypto policy.
Banking Sector Struggles
Americans might not be so far off in their belief that the current financial system needs an overhaul. In the first quarter of 2024, at least 63 U.S. banks were on the brink of insolvency, which was a big increase from the 52 banks listed as problematic in the third quarter of 2023, according to the Federal Deposit Insurance Corporation’s (FDIC) quarterly report that was published on May 29.
These banks are collectively facing $517 billion in unrealized losses, a rise of $39 billion from the previous quarter. This is now the ninth consecutive month of unusually high unrealized losses, driven largely by higher mortgage rates which have impacted residential mortgage-backed securities.
The health of the U.S. banking system has been under scrutiny since March of 2023 after the sudden collapse of Silicon Valley Bank and the voluntary liquidation of Silvergate Bank. Shortly after this, Signature Bank was forced to close by New York regulators on Mar. 12.
UK Election Delays Crypto Policies
Politics are also increasingly affecting the crypto space in the United Kingdom. British Prime Minister Rishi Sunak announced that the UK general election will take place on Jul. 4. At the Consensus conference in Austin on May 30, CryptoUK Board Advisor Ian Taylor stated that the Jul. 4 election would likely push back crypto regulatory policy by several months.
The U.K. government initially planned to present a regulatory framework for cryptocurrencies and payment stablecoins in July before any election.
Taylor is concerned about the delay because Asia and Europe are already ahead in crypto policy. The election could also alter party control of the U.K. government that may potentially lead to changes in crypto policy.
The Conservative Party has governed since 2010, but polls suggested that the Labour Party, led by Keir Starmer, could take over. Taylor mentioned that the worst-case scenario under a new government would be deprioritizing crypto, although current messages indicate support for crypto decisions.
With the election in July, the U.K. government will enter a summer recess and later the party conference season, delaying any important crypto regulation activity for months. Unlike the Conservatives, Labour leadership has made very few public statements about digital assets.
Turkey’s New Approach
Meanwhile, Turkey decided against imposing taxes on profits from stocks and cryptocurrencies, opting instead for a “very limited” transaction levy. Treasury and Finance Minister Mehmet Şimşek shared in an interview in Ankara that this move will ensure justice and effectiveness in taxation, but he did not specify the levy’s size. This decision comes after Turkey reduced its tax rate on stock market profits from 10% to 0% in 2008.
Bloomberg reported on Jun. 4 that Turkish authorities were planning a ‘very limited’ tax on gains from stock and cryptocurrency trading after Minister Şimşek placed a lot of emphasis on the importance of properly taxing all financial income during a recent meeting.
Currently, Turkey does not have specific regulations for taxing cryptocurrencies but is working on a legal framework for digital assets. On May 16, Turkey’s ruling party introduced a bill to regulate the crypto market that requires crypto businesses to obtain licenses and adhere to international standards, including regulation by capital markets boards. The legislation mandates revenue collection from crypto service providers and bans foreign crypto brokers to promote a locally regulated ecosystem.
Turkey currently ranks fourth worldwide in crypto trading volume, with an estimated $170 billion traded in 2023, surpassing some other countries like Russia, Canada, Vietnam, Thailand, and Germany. However, Turkish crypto holders have been banned from using cryptocurrencies for payments since 2021.
Zimbabwe Battles Black Market Issues
In Africa, Zimbabwe Gold (ZiG), a currency that evolved from a gold-backed token, has shown a lot of promise on the foreign exchange market but has run into some challenges domestically. On Jun. 4, the Zimbabwe Reserve Bank (ZRB) announced measures to combat the black market for the currency and improve ZiG's usability.
The ZRB urged the public on its X account to report illegal currency traders and businesses refusing ZiG. This is part of ongoing actions against illegal foreign exchange trading. According to Bloomberg, ZiG has appreciated by 1.9% against the US dollar since its physical introduction.
Since May 15, Crime Watch Zimbabwe reported the arrest of 224 illegal FX traders, freezing of 90 bank accounts, and the fining of 40 people by the ZRB Financial Intelligence Unit (FIU). The crackdown led to a decline in illegal money changers in Harare’s Central Business District.
However, other challenges persist, including a shortage of ZiG coins in denominations of ZiG1, ZiG2, ZiG5, and ZiG10. The ZRB plans to make ZiG cash available for withdrawal from the government-owned Homelink financial services using debit cards in seven cities starting Jun. 10.
ZiG, Zimbabwe’s sixth currency in 15 years, is backed by gold and foreign currency. At first, it was introduced as a digital currency tied to gold prices, but it then became a physical currency in April. Since then, it has received mixed reactions.
