In a way, crypto has spent years adrift in a stormy, regulatory sea.

It’s paddled desperately with a shark-bitten oar and experienced intense hallucinations from drinking all that salt water.

But is there land in sight?

Could one of the four crypto bills in Congress finally clear up the murky regulatory waters and bring crypto home?

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Espresso Shots

☕️ Democrats Demand Crypto Tax 🪙 🧾

Senators Elizabeth Warren and Bernie Sanders, in addition to Senators Bob Casey and Richard Blumenthal, penned a letter to the IRS and the Treasury urging them to publish tax guidelines for crypto brokers… and enforce them just as quickly.

Much of the letter reemphasized directives from the Senate’s $1.2 trillion infrastructure bill, which was passed last August.

The Democrats behind the letter believe that crypto brokers are exploiting a tax loophole to cheat the government out of an estimated $50 billion a year.

However, while these Senators (especially Elizabeth Warren) are already on the books for being notoriously anti-crypto, we wish them all the best with their letter scold.

Though usually, when it takes four people to write a letter, they’re elves. Two to jump on typewriter keys and two more to feed paper into the carriage.

☕️ Crypto Fraud in Utah 🪙 ❌

DEBT Box, a Utah-based crypto mining firm, has had its assets frozen and received a restraining order from the SEC for allegedly fraudulent crypto sales amounting to $50 million.

DEBT Box sold “node licenses” to hundreds of investors, claiming that the node licenses would continue to mine crypto on the blockchain and increase in value. But the crypto that these investors were receiving was actually instantaneously generated by DEBT Box using codes on the blockchain.

“We allege that DEBT Box and its principals lied to investors about virtually every material aspect of their unregistered offering of securities, including by falsely stating that they were engaged in crypto asset mining,” said Tracy S. Combs, Director of the SEC’s Salt Lake Regional Office.

With DEBT under federal scrutiny, Utah crypto developers can get back to their primary directive: finally rolling out MormonCoin.

☕️ SHIB’s New Identity 🐶 ✨

Shiba Inu is developing a new digital identity protocol to build trust with users and regulators.

In addition to creating more transparency, this new development represents an ideological shift for Shiba Inu, as its developers attempt to shift away from memecoin status and become another serious DeFi contender.

A major component of Shiba Inu’s new identity model will be a focus on self-sovereign-identity, the digital equivalent of documents such as driver’s licenses or passports.

"We are laying the groundwork for a new global standard in decentralized digital trust and international identity verification,” said Shytoshi Kusama, one of Shiba’s lead developers, in a message to Coindesk. “In this way, Shibarium is the herald of a new digital age where faith in systems is restored and enhanced.”

Hopefully, Shiba Inu’s new direction will help other dogs identify that bad, scary dog that lives in the hallway mirror.

Spilling the Beans

Can Congress Make Crypto Legal? 🇺🇸 🏦

Crypto has occupied more of U.S. discourse than electric vehicles, or the Orioles' playoff chances.

But it’s missing one crucial ingredient that green initiatives and the MLB both have, and that’s regulation.

Because of the lack of regulation in the space, the SEC got involved. And the SEC hasn’t been the kind shepherd gently guiding crypto into American homes. If anything, it’s become crypto’s bonafide antagonist.

And that situation, rightfully, hasn’t sat well with the governing bodies supposedly more powerful than the SEC.

It’s high time that the crypto decision was lifted out of Gensler’s hands and into a more suitable caretaker.

But here’s the issue, governmental change happens at a glacial pace. But like Greenland’s melting ice caps, change is happening, it’s just happening very slowly.

And that change has arrived in the form of four crypto bills which are currently being argued over and picked apart at the highest levels of government.

The four bills have passed the U.S. House Financial Services Committee, but will they go the distance and make it into law? That remains to be seen.

But in the meantime, let’s do a rundown of all four and you can decide how you like crypto’s chances. Ready? Cool.

The Financial Innovation and Technology (FIT) for the 21st Century Act

The first major crypto bill, often abbreviated as the “FIT for the 21st Century Act” would establish a clear, regulatory framework for the trading of digital assets with the SEC and CFTC.

This is a broad, lofty, sweeping piece of legislation. On the surface, it appears to be the answer to all of crypto’s problems.

But this bill has one major weakness. It’s not a bipartisan effort. This bill is sponsored solely by Republicans, whom the Democrats feel have been impatient in their efforts to advance the crypto agenda.

Republicans are primarily in the pro-crypto camp and also strongly anti-Gensler and excess SEC oversight. But without support across the aisle, this effort may be killed by Democrats favoring more regulatory scrutiny.

The Blockchain Regulatory Certainty Act

Now, this second bill concerns the classification of blockchain services and crypto exchanges.

This legislation would keep the aforementioned institutions from being wrongfully classified as banks or brokers, as long as they’re not taking custody of customer funds.

This bill is designed more for protecting the exchanges and crypto providers than the consumers. On the surface, it seems pretty clear-cut and would shoot down countless, potential SEC lawsuits.

And unlike the first bill, the Blockchain Regulatory Certainty Act has bipartisan support. The bill was introduced by Majority Whip Tom Emmer (R.) and Rep. Darren Soto (D.).

Which means that this bill has a much greater chance of actually making it to the finish line.

Though again, this is legislation that protects the providers, not the investors like you and me, but we’ll take whatever we can get.

The Clarity for Payment Stablecoins Act

This bill would lay the legislative foundation for a clear, regulatory path for stablecoin issuers.

And good news, this is another one with bipartisan support.

Stablecoins are a crucial stepping stone in getting American crypto where we want it to be.

And Stablecoins need all the help they can get right now.

As we mentioned in yesterday’s newsletter, the National Defense Authorization Act includes KYC and anti-money laundering amendments that would be disastrous for stablecoins unless that regulatory pathway is cleared up.

And we’re all for stablecoins, but they’re not quite what we’re after, are they? It’s sort of like getting approval for Diet Coke when we’re all craving the sugary, full-bodied flavor of regular Coke, untied to fiat currency.

The Keep Your Coins Act

This last bill is about protecting crypto self-custody rights.

The bill was introduced by Rep. Warren Davidson, so it’s fully Republican-backed. But in comparison to the regulatory overhauls of the previous bills, this one feels like a meager ask.

In short, this bill would ensure that American citizens have the right to act as their own custodians for digital assets, even against the intervention of a federal agency.

It feels very American. This bill is pro-privacy and anti-surveillance.

Though if passed, this bill doesn’t feel so much like a victory as a protection against future interference, it’s a defense of the status quo.

After all, we’re pretty sure Obama once said if you like your crypto, you can keep it.

Now, that sums up our rundown of Congress’s four bills. If you’d like to learn more about how a bill becomes a law, we highly recommend “School House Rock;” they have catchy songs that we just can’t duplicate with the written word.

But as for the bills, maybe one of them will pass, maybe all of them will pass.

Whatever happens, the fact that this debate is happening in Washington means that crypto has secured a firm toehold on the long, rocky climb to legitimization.

And yes, if it were up to us, all of the bills would pass.

But we’re not members of the federal government. If we were, the newsletter would have a red and blue motif and there would be a lot more graphics featuring Doric columns.

Premium Market Report

Exploit Drains $52M from Curve Finance, Validators Gain $11M in MEV Rewards
Source: TheBlock + CoinDesk

📃 Summary:

Meme of the Day

Ahh yes, another murky tax season ahead for crypto. 😑

Crypto 101

SSI (Self-Sovereign-Identity): As we mentioned, this is the digital equivalent of a primary identity document like a passport or driver’s license.

But SSIs help with a problem that every internet user faces. By utilizing an SSI, instead of logging into identifier after identifier, such as a Google or a social media account, an SSI lets you maintain your identity across platforms while still keeping your sensitive information secure.

The Last Sip

Yes, we were kidding about Utah releasing MormonCoin, but it inspired us to hope for more, regional crypto…

Michigan - DodgeCoin: The automotive capital of America should have a native token as excessively masculine and road-threatening as a Dodge truck.

Nevada - SEX-RP: In the only state where sex work is legal, this sensual offshoot of Ripple’s native token should have no problem doing brisk business.

New Mexico - Methereum: The very real setting of the fictional “Breaking Bad” should have crypto as addictive and mind-melting as a desert sunset.

Stay Caffeinated,

Coffee & Crypto Team

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DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.