It is past time for Congress to recognize the potential of Bitcoin and other cryptocurrencies and to modernize the existing legal framework.

Among other advantages, Bitcoin and other cryptocurrencies have a built-in defense against runaway inflation. Right now, Americans are suffering the consequences of a massive increase in the money supply caused by unprecedented government spending. Bitcoin has a limited supply and enables its users to transact freely and with certainty. Politicians and industry insiders cannot manipulate it. 

Bitcoin also enables the freedom to transact, a right that is fundamental to all others. For example, political participation requires transportation, fuel, food, and sometimes lodging; getting the word out means using phones, websites, and advertising. Such transactions are increasingly reliant upon centralized electronic payments, which is convenient, but presents risks of abuse from governments that lack a strong commitment to personal freedom. Cryptocurrency places the freedom to transact outside the reach of abusive politicians and corrupt financial institutions.

Precisely for this reason, there are some in government today who are aiming to limit the use of cryptocurrency and the expansion in freedom that comes with it. Ironically, many rules currently used to regulate the cryptocurrency industry were made before computers even existed. Congress, for its part, has failed to provide an updated framework. This has allowed the Securities and Exchange Commission to engage in “regulation by enforcement” to expand the scope of its jurisdiction without legislative authorization. The agency has veered so far from existing statute that a federal judge recently accused the SEC of “hypocrisy” for litigating “not out of a faithful allegiance to the law.” 

Ultimately, it is the responsibility of Congress to provide clear guidelines that facilitate the unique potential for this industry. As a starting point, such legislative guidelines would (1) protect the freedom to invest and transact, (2) refrain from picking winners and losers, and (3) provide clear guidance to market participants and regulatory agencies.