Why Did Hilary Clinton Turn Against Cryptocurrencies?
Hilary Clinton has just shared her opinion about Bitcoin and Cryptocurrencies being able to destabilize nations and be used for illegal activities if in the wrong hands. With the Biden administration looking to crack down on cryptocurrencies, what does this mean for the future of digital assets?
Hilary Clinton on Bitcoin and cryptocurrencies
Bitcoin and cryptocurrencies have been powerful financial assets and have provided sky-high profits to many investors in the space. As the prices have grown, we have seen the popularity grow along with it. Established personalities like Elon Musk and Mark Cuban among others see the benefit of such assets, and we are slowly seeing cryptocurrencies be integrated as forms of payment as well.
But, it seems like a completely different story for the United States government and politicians, who have forever been after centralizing cryptocurrencies.
Hilary Clinton was speaking at a panel discussion at the Bloomberg new economy forum in Singapore where she shared her pessimistic view on Bitcoin and cryptocurrencies.
“What looks like a very interesting and somewhat exotic effort to literally mine new coins in order to trade with them has the potential for undermining currencies, for undermining the role of the dollar as the reserve currency, for destabilizing nations, perhaps starting with small ones but going much larger.”
Hilary Clinton is speaking about the possibility of cryptos growing to the point that some people may claim its benefits over the dollar. Many in the crypto world already believe that Bitcoin and cryptocurrencies are better for the people. This is because they are decentralised and thus allow any single person to check the previous transactions off the market. More importantly, the United States government does not have the power to leverage cryptocurrencies for major economic benefits like we see during periods of recession.
As for the destabilizing of smaller nations, one can only assume that this is a shot at El Salvador. El Salvador is the first and only country to have accepted Bitcoin as a legal tender, something which has not gone down well with other governments, especially the federal reserve in America. Although Hilary’s remarks have not managed to change the thought process of El Salvador and president Nayib Bukele.
El Salvador plans to build a ‘Bitcoin city’
While Hilary Clinton was speaking about Bitcoin’s potential to destabilize nations such as El Salvador, the country doubled down on their backing of Bitcoin. Nayib Bukele said that he plans to build the world’s first Bitcoin city, which would be funded by Bitcoin-backed bonds.
This doubles down on his bet to use bitcoin as a catalyst for economic prowess and to fuel investment in the country. This announcement came just a day after Clinton’s remarks about the world’s countries needing to be cautious over this volatile asset, so it is clear that El Salvador is long on bitcoin for the long run.
This announcement came at a week-long event held in the South American country and had the backing of many people in the sector. “This is going to make El Salvador the financial centre of the world”, said Samson Mow, who is the Chief Strategy Officer of Blockstream. He was alongside Bukele at the event and demonstrated his support of the decision. So it is pretty clear that there are two completely different views on the need for and implementation of crypto assets.
‘Bitcoin could get into the wrong hands.’
In her speech for the Bloomberg forum, Hilary Clinton justified her reasons for being sceptical about Bitcoin. Her main concern was that if the cryptocurrencies got in the hands of the wrong people, they could be a direct threat to nation-states. “There’s a whole new layer of activity that could be extremely destabilizing or, in the wrong hands or alliances with the wrong people, could be direct threats to many of our nation-states and certainly to the global currency markets,” she added.
These comments are broadly referencing the problem with crypto-related hacking and its usage for money laundering. In the summer of 2021, Biden also set up a ransomware task force, to deal with cyberattacks that are emerging from crypto-related payments, says Decrypt. This comes after a few instances of Bitcoin and crypto being used for illegal payments. For example, from Hilary Clinton’s election run in 2016 itself.
While she was facing Donald Trump in the 2016 presidential elections, Hilary Clinton believes that Russia had something to do with the several hacks that the campaign faced. She criticised Vladimir Putin and accused him of deploying a large base of hackers who look to spread cyberwarfare. Chainanalysis also shared some evidence claiming that North America is the number 1 target for crypto-based ransomware attacks. Over $130 million has been paid out to criminals in crypto in the last year, which has cautioned the United States government and raised concerns over the decentralisation of cryptocurrencies.
Since there is some evidence that cryptocurrencies are being used for illegal activities, does that mean that we have seen the full picture? Let’s take a look
Crypto is often wrongfully blamed in money laundering
Money laundering alone costs the worldwide economy between $800 million to $2 trillion every year. This makes up for about 2–5% of GDP, with more than 90% of it going undetected. But Aly Madhavji, a UN consultant and blockchain entrepreneur believes that crypto and Bitcoin are always used as the scapegoat for illicit activities.
While mainstream media targets crypto assets for the number of hackers and money launderers that use these currencies, banks have been involved in the same number of illegal activities on a much higher level. Aly goes on to say that banks are a very common source for payments across borders. What happens more than often is that money sent to cross-borders via bank transfers can easily be sent to shell companies, which facilitate money laundering. “The gatekeepers of our financial system are also associated with money laundering,” says Madhavji.
One such event was the HSBC money-laundering scandal, which was a scandal involving nearly $900 million in illicit profits, which are believed to have come from the illegal sale of drugs. The multi-national bank even paid a huge fine of nearly $2 billion due to failure to uphold the anti-money laundering laws.
If we take a look at anti-money laundering fines, there was a total of over $8 billion worth of fines in 2019, out of which more than two-thirds of the penalties were imposed on banks. The gaming, cryptocurrency and gambling industry combined for about 17% of the penalties.
Worldwide financial safety reports cryptocurrency money laundering is exaggerated
The Society for Worldwide Interbank Financial Telecommunications (SWIFT) has stated that the role of cryptocurrencies in money laundering has been greatly exaggerated, according to the AsiaTimes. In fact, this network provider which issues the safe transferring of information across borders has said that fiat currency is the most used medium for illicit activity.
All these reports have only gone on to defend and support Bitcoin and cryptocurrencies. This goes to show that Hilary Clinton and other leaders are more worried about not being in control over cryptocurrencies than their usage for crimes.
But this is not enough to convince them to stop targeting cryptocurrencies.
The crypto targeting continues
Just last week, Joe Biden signed a huge infrastructure bill that included new tax requirements for all Bitcoin and crypto companies. To get information about investors using crypto assets, exchanges and brokers, every investor needs to provide the government with their usernames, numbers and capital gains and losses. The Internal Revenue Service (IRA) is going to be conducting the tax registration and filing, which means the government is about to enjoy a huge slice of the pie from 2023, once this law becomes official. Most taxes will be beginning from over $10,000, in which case a lot of investors will probably have to hand over a piece of their winnings to the US government.
Biden has the same view as Hilary Clinton in this regard, so it is not a surprise that he has initiated rulings that give the USA some more control over crypto assets. But other world leaders are also sharing similar viewpoints.
Narendra Modi, the prime minister of India has called for countries to work together to stop cryptocurrencies from ending up in the wrong hands. India may be planning to ban any sort of Bitcoin or crypto asset being used for payments but will continue allowing the digital assets to be bought and sold.
So for now, the central governments look like they are just getting started with their all out-attack on cryptocurrencies.