The Department of Treasury in the United States requested public comment from the Bitcoin Policy Institute (BPI), a nonprofit organization researching the policy and societal implications of Bitcoin and emerging monetary networks on the security implications of digital assets.
In response to the department’s request, BPI produced an extensive report clarifying the overall value of Bitcoin as a tool for freedom, comparing it to various successfully U.S funded initiatives like Radio Free Europe and the Tor network.
Claiming the similarities between the Tor network, an open-source privacy network that enables anonymous web browsing, and Bitcoin, the report counted on the factors as to how both of these enable independence for people escaping the authoritarian regime. The Tor network allows people to access the right to communicate globally freely; similarly, Bitcoin allows people to free trade and transact.
Advocating for digital assets, the report also highlighted the empowerment it brings to individuals, the independence from the stringent and adverse authoritarian regime, and optimum advancements in the interest of national security. Cryptocurrencies like Bitcoin promote autonomy, cooperation, and liberty as cordial to national ideals.
Bitcoin was highlighted as a people-friendly asset allowing easy transactions, trade, and custody with the essential requirement of an internet connection. The transactions are open, permissionless, and cannot be reversed, frozen, or seized. It is unique from other cryptocurrencies given its comprehensive decentralization, absence of leadership or founding group, and optimization in terms of resisting censorship.
Further, the BPI’s report acknowledges the risks involved with cryptocurrencies, mentioning the increase in revenue from hacking and theft, the increase in scale and severity of ransomware operations, and the increasing use of Monero by criminal groups. However, the reported revenue increase was mainly from the funds’ stolen decentralized finance (DeFi) protocols.
In addition to the exploitation of DeFi protocols, the infamous Lazarus group, a hacking group controlled by the North Korean intelligence service, was also mentioned blaming their Ethereum-based mixer Tornado Cash for launching stolen assets.
Condemning the decision of OFAC (an agency in the Department of Treasury) to sanction the smart contracts, the report also expressed the concerns of the crypto community and the chances of it being challenged in court.
The report also dismisses the claims of Bitcoin being used as a tool by nations like Russia to evade sanctions from the U.S. amidst the Russia-Ukraine war stating the absence of any evidence supporting it.
In concluding the report, BPI stated the importance of Bitcoin in advancing technology and also gave suggestions to the Treasury, referring to it as the strategic principles aiming to reduce the risks. The suggestions were as follows:
- A balanced net assessment of Bitcoin and other digital assets networks should be conducted. It referred to technology as new and highlighted the need for experience and skill to comprehend it.
- The regulatory framework or policy must not be a single issue centric and should consider the more significant strategic interests at stake. Additionally, the policies should be balanced, not putting national security in a spot that sacrifices innovation and technology leadership.
- The report also urged the Treasury to identify decentralized digital asset networks without leadership or governing body, thus creating chances of underrepresentation in politics.
- Lastly, the Treasury was suggested to relax the tax policies and rules, easing the process of receiving Bitcoin as investment and payment for exports by the U.S. agencies.