Tolu is a cryptocurrency and blockchain enthusiast based in Lagos. He likes to demystify crypto stories to the bare basics so that anyone anywhere can understand without too much background knowledge. When he's not neck-deep in crypto stories, Tolu enjoys music, loves to sing and is an avid movie lover.
Sherman wants a crypto ban in the US but thinks it is not easy to take such a decision now because crypto has become a lot more powerful.
The head of the House Subcommittee on Investor Protection, Brad Sherman, said he does not think the United States (US) would ban crypto anytime soon. The Congressman also stated that the US government did not ban crypto when it started because it did not realize the importance of digital assets at the time.
According to Sherman, it is now difficult to ban cryptocurrency in the US because there is too much money and power behind it. The crypto industry has become a significant financier of campaign donations. Like many critics of cryptocurrency, Sherman’s concern is that investors do not lose their money to fraudsters. The Californian politician argued that crypto poses a systemic threat that enables criminals and human-rights abusers. Sherman also noted that digital assets undermine the superiority of the US dollar.
Sherman’s Historical Push for Crypto Ban in the US
In 2018, Sherman supposedly suggested a blanket ban on cryptocurrency. The Congressman pleaded with colleagues to help outlaw the purchase of cryptocurrency by Americans. He said an awful lot of the US’ international power is because the US dollar is the standard unit of international finance and transactions. According to him, allowing cryptocurrency would weaken the dollar’s power.
During a hearing last year, Sherman argued that cryptos are only suitable to evade taxes and maneuver Know Your Customer (KYC) guidelines. He said digital assets have the backing of patriotic anarchists that are trying to avoid paying taxes to the government.
In 2020, the Securities and Exchange Commission (SEC) filed a lawsuit against Ripple, alleging that XRP is not a registered security. Recently, Sherman also stated during a congressional hearing that XRP is a security. He then asked SEC Division of Enforcement director Gurbir Grewal why the agency has not sanctioned platforms listing illegal securities like XRP.
The Tornado Cash Ban and the Resistance
Last month, the US government banned the controversial Tornado Cash protocol, a crypto mixer that enables users on the Ethereum blockchain to camouflage the root and recipients of their transactions. The Treasury Department has also identified Tornado Cash as a threat to national security. The Department stated that North Korea has laundered $1 billion in stolen funds through the platform. Furthermore, the US government said the platform’s shortcomings allowed cyber-criminals to steal about $7 billion in crypto.
According to the US government, Tornado Cash did not do enough to stop or prevent money laundering. At the time, TRM Labs head of legal and government affairs Ari Redbord commented saying:
“Today’s sanctions against Tornado Cash is a watershed moment, not only for the crypto industry, but for the financial sanctions writ-large as it targets, as, opposed to prior sanctions, a widely used mixing service and, potentially, answers the question of whether or not US regulators and law enforcement are going to tolerate the use of mixers to launder illicit proceeds.”
The Tornado Cash ban shows that the US government can ban crypto, even though the action would come with resistance. Already, US congressman Tom Emmer has questioned Treasury Secretary Janet Yellen regarding the ban on Tornado Cash. Emmer argued that banning smart contract-powered software does not support Financial Crimes Enforcement Network (FinCEN) precedent. He believes that the ban infringes on American citizens’ right to privacy.