Tag: Zirkle

Senate Bill Threatens Future of Cryptocurrency

By Andrew Zirkle|WASHINGTON

Hidden within the “Combating Money Laundering, Terrorist Financing, and Counterfeiting Act of 2017”, also known as S.1241, are far-reaching regulatory provisions expected to heavily affect users, traders, and holders of all types of cryptocurrencies, including Bitcoin.

The bill was pushed into a Judiciary Committee hearing on the 28th of November, without much notice to the public. The bulk of the 2-hour hearing focused on other elements of the bill, with the only mention of cryptocurrency happening very briefly during a discussion on money laundering. The hearing also featured a testimony from Kathryn Haun, who is on the Coinbase board of directors. She did not mention any information regarding cryptocurrency or its exchanges.

The bill, which contains 20 sections, was written under the guise of preventing illegal money operations. However, its relatively small changes to the legal status of cryptocurrency are expected to have far-reaching ramifications. Section 13 of the bill indicates that “digital currency” is to be added to the list of items that the US Treasury Department will consider as “financial institutions.” Although this change in legal definition may seem small, the impacts it would have for cryptocurrency users would be significant.

The owners of cryptocurrency would be required to report their holdings in cryptocurrency to the IRS as assets, and also may be required to pay a long-term capital gains tax of up to 25%, or regular federal income tax of up to 39.6%, on the revenue earned from selling cryptocurrency for more than its previous value. Holders of cryptocurrency who do not report their holdings as assets to the IRS would be subject to tax evasion penalties or jail time. The bill fails to address many of the complexities of digital currencies, including the tax protocol for exchanging US Dollars for cryptocurrency multiple times before selling back to dollars, as well as any tax burdens that may be held by cryptocurrency exchanges.

The measure also subjects holders of cryptocurrency to more government scrutiny, meaning individuals who are believed to be misrepresenting their crypto holdings or transactions could have their financial information seized by the IRS or subpoenaed in court. Section 13 of the bill also requires the “detailing a strategy to interdict and detect…digital currencies…at border crossings and other ports of entry for the United States.”  This means that even someone with basic electronic equipment could be questioned or searched by border and customs officials, as well as the TSA.

Although the bill does contain a lot of important updates to the criminal code regarding money laundering, many in the cryptocurrency community are calling for a re-examination of the bill itself and section 13, as it is widely believed that it does not properly account for the nature of cryptocurrencies in its attempts to regulate.


TSA Administrator Asks for Extra Funding Amid New Major Security Concerns

By Andrew Zirkle|WASHINGTON, D.C.

Today on Capitol Hill, Transportation Security Administration (TSA) Administrator David Pekoske testified in front of House Homeland Security Committee hearing entitled “Preventing the Next Attack: TSA’s Role in Keeping Our Transportation Systems Secure.” Pekoske, who was sworn in as the seventh administrator of the TSA in August, was testifying in front of Congress for the first time since his appointment. Pekoske is inheriting a TSA faced with many problems, including an ever-increasing passenger volume, new security threats, as well as internal organizational problems.


David Pekoske


A 2015 report that surfaced earlier this year showed that the TSA overall had a 95% fail rate when it came to detecting prohibited items. Despite promises of reform, the latest round of testing by the Department of Homeland Security has revealed that the fail rate is still over 50%. Although this new figure seems promisingly lower, a source close to the issue interviewed by ABC said that the fail rate in actuality is close to 80%. These vulnerabilities, which were reportedly highlighted by the Inspector General before the hearing, were described by Congressman and Committee Chair Michael Mccaul (R-TX) as “disturbing.” Additionally, Rep. Mccaul stated that “I don’t think that the American people can afford to wait to for their own safety.” The TSA has also been entangled with other pressing internal problems. According to an internal review, 858 officers have been found using marijuana, cocaine or opiates.

During the hearing, Pekoske outlined his desire to replace current X-Ray technology with newer CT 3-D imaging technology. The CT system, which is undergoing currently limited trials in Phoenix and Boston airports, is a largely untested but promising technology. Throughout the hearing, Pekoske strongly defended the new CT technology, suggesting that the only reason why it had not been implemented is that of a lack of funding. Pekoske also highlighted the TSA’s desire to incorporate biometric data including face scans and fingerprint data in order to verify passenger identity and collaborate more efficiently with U.S. Customs and Border Patrol.

Overall, the message of the hearing remained that Pekoske wanted more funding to achieve goals relating to security and workforce. As Democrats and Republicans continue to fight over budgeting issues, it remains to be seen whether or not the TSA will be able to improve its abysmal performance without incurring a larger expense on the budget.