Rachel Warren: But there’s one of the next things they’re going to be auctioning. I guess it’s $56 million worth of cryptocurrency that authorities confiscated as part of a Ponzi scheme case. It’s like, these are things that are not hitting the headlines, but it’s going on.
In this segment of Backstage Pass, recorded on Dec. 20, Fool.com contributors Rachel Warren, Toby Bordelon, and Jason Hall discuss this phenomenon and a recent report on government crypto auctions by CNBC. Plus, they share their takes on what this news means for crypto investing on a broader scale.
I think this helps not only legitimize it, but it can protect investors as well. One more point I wanted to make. I saw this interesting article on TechCrunch. We know sometimes when there have been crypto experts appearing before lawmakers and trying to explain how it works and you see on C-Span, the puzzled look on some of these guy’s faces.
I was really fascinated apparently “in July the DOJ hired a San Francisco-based, anchorage digital to be it’s custodian for the cryptocurrency seized or forfeited in criminal cases. It’s the first federally chartered bank for crypto and will help the government store and liquidate this digital property.” I think in this area, we know that cryptocurrency has been an area that has been open to abuse for a while.
I think that’s the area where we’re seeing the lobbying slow to catch up with technology. We had some of the recent tax changes that are being applied to crypto, but some of it was adjustments of tax law that have been enforced for a while. Getting that to apply to digital currency, it’s a whole different animal than what regulators have dealt with before.
We want to have laws that weren’t written 100 years ago when there was no crypto around. You want laws that are going to apply specifically to digital currency. This article was talking about not being anti-regulation, but anti unworkable regulations that are very hard to apply to crypto. It was saying “ultimately we need to regulate with efficacy which necessitates legislation that’s applicable specifically to digital assets”.
I think it’s going to be a process, but I definitely think there needs to be more of a look at how the laws can be applied specifically to digital currency. Otherwise, it’s maybe not going to be as efficient and you’ve got the bad guys that will just work around it. Those are just my thoughts. [laughs]
Toby Bordelon: Why are we auctioning cryptocurrency? It’s one thing to auction off a car, but there’s a robust and fairly efficient market for Bitcoin (CRYPTO:BTC), you can just sell that on the open market. I don’t see why they’re holding an auction for it. That doesn’t make sense to me.
Jason Hall: Is there anything in federal code about seized assets that have auctions? Toby Bordelon: I don’t know, do they auction off pounds, do they seize them or do they not just go to the bank and say, here give me some dollars for this.
Rachel Warren: One of the things that were auctioning, they were going to be reimbursing victims of fraud. I think sometimes it’s use like that and then other times maybe, Uncle Sam uses it. Toby Bordelon: You can convert that Bitcoin to cash pretty effectively without an auction process.
Jason Hall: Well, hang on Toby. You’re the attorney here, you know this better. Well, you’re not a tax attorney. Toby Bordelon: That’s true.
Jason Hall: That’s a good question. Toby Bordelon: Sell it through Schwab or something like here give us cash in whatever the current market price is?
Toby Bordelon: That’s right. They consider it a property, would you auction off like shares of stock, if you seize that or would you not? Jason Hall: The federal government does not consider Bitcoin or any crypto asset a currency. It’s not a currency it’s an asset.