The US venture capital firm a16z recently released the 2024 Crypto Annual Report, which mentioned that cryptocurrency and regulatory policies are hot topics for discussion during the US presidential election. The following is an extended analysis report on the important changes in the US government's regulations on virtual currencies.
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ToggleBitcoin and Ethereum ETFs officially approved by the government
On 1/10 this year, the US SEC officially approved the Bitcoin ETP (Exchange-Traded Products, the official registered name for ETFs), and on 7/24 the Ethereum ETP was also approved for issuance. The issuance of the ETP did not immediately stimulate the prices of BTC and ETH, but it symbolizes that virtual currencies and digital assets have been recognized by mainstream institutions and can be legally invested under government regulations.
Wyoming passes the DUNA Act, opening up new tax-saving opportunities
On March 7, Wyoming Governor Mark Gordon signed the DUNA Act into law. The significance of the DUNA Act passing is not only that it demonstrates Wyoming's supportive stance on blockchain and new technology startups, but it also provides a solution to the challenges faced by decentralized organizations, and even reinterprets the innovative structure of DAOs.
The new structure of DAOs (Decentralized Autonomous Organizations) is called "Decentralized Unincorporated Nonprofit Associations" (DUNA). This allows DAOs to maintain their decentralized nature while complying with the law. DAOs have always been seen as a new hybrid between corporations and nonprofit organizations. Interestingly, the DUNA Act includes an important provision that allows DAOs to be converted into limited liability companies and to acquire, hold, and transfer real estate in the name of DUNA, while also being able to profit and maintain their "nonprofit organization" status.
The SEC had already determined in 2017 that although DAOs are decentralized organizations, they cannot be exempted from being unregistered securities. The SEC believes that as long as securities (or shares) are issued and registered in the US, they should be subject to US securities laws, regardless of whether the members subscribe in US dollars or virtual currencies.
The Commodity Futures Trading Commission (CFTC) has a similar view on DAOs. The CFTC believes that DAOs cannot be treated as legal entities, but rather as a group of individuals. The DUNA structure allows DAOs to transform into unincorporated nonprofit associations.
Wyoming has mainly supported the Republican Party and Trump over the years, and this state with only 560,000 residents is home to many hidden billionaires. There are many discussions online about why billionaires are attracted to this state, which still remains in the wild west cowboy era. The wealthy in Wyoming are not locals, but rather out-of-state migrants. This state is full of desolate small towns, with nothing but barren mountains and empty land, and skiing in the winter. Since the pandemic began, a large number of people have migrated from New York and Los Angeles to heavily invest in real estate here.
The Wyoming government website claims that it is the most business-friendly state in the US, with virtually no taxes - no corporate tax, personal income tax, property tax, sales tax, storage tax, or franchise tax. Recently, Wyoming's real estate has been hyped to new highs, with the average annual income of residents in Teton County, Wyoming being $100,000, but the average property price registered is $7 million. In this context, the real estate investment clauses passed in the DUNA Act are particularly worth noting.
According to the Wyoming Blockchain Report, the Wyoming legislature has been enthusiastically embracing blockchain and cryptocurrencies since 2016, and has been committed to supporting blockchain, being the first state to support the Token Taxonomy Act.
The cryptocurrency mining company Elite Mining Inc relocated to Cheyenne, the capital of Wyoming, in 2021, claiming to mine using renewable energy.
Interestingly, according to the Google Trends report compiled by a16z, the search volume for Bitcoin and Ethereum in Wyoming has not increased, but rather decreased, which can be understood as the people of Wyoming already understanding the principles of Bitcoin. Under the local autonomy of each state in the US, Wyoming may become a popular region for DUNA registration next year.
The FIT 21 Act makes political donations transparent
In May 2024, both the Democratic and Republican parties supported the passage of the FIT 21 proposal (the 21st Century Financial Innovation and Technology Act). The purpose of this act is to provide clear and transparent regulation for cryptocurrencies, which can protect entrepreneurs or investors from financial harm and prevent future SEC sanctions and lawsuits.
The FIT 21 bill, which was passed before the US presidential election, also has another important meaning. According to Reuters, recent data shows that half of the political donations made by companies to political parties come from cryptocurrency companies. The US House of Representatives passed the proposal on May 22, with the support of cryptocurrency companies such as Coinbase, The Block, and Digital Currency Group, in order to make political donations transparent before the year-end election, reducing the hassle of being reviewed by the SEC and CFTC after the election.
