On Friday, New York lawmakers passed a bill banning crypto mining operations that utilize carbon-based power sources. If this bill becomes law there will be a two-year prohibition on cryptocurrency mining operations. The bill is now before Governor Kathy Hochul who can either sign or veto it.
According to Perianne Boring, the founder and president of the Chamber of Digital Commerce, this bill would make New York the first state in the country to ban blockchain technology infrastructure.
As explained in the bill, the state of New York implemented the Climate Leadership and Community Protection Act to help regulate and improve the future of the environment. Since cryptocurrency mining operations require a great deal of energy, a new section of the environmental conservation will be added. It states that new applications, new permits and the renewal of existing permits will not be approved “…for an electric generating facility that utilizes a carbon-based fuel and that provides, in whole or in part, behind-the-meter electric energy consumed or utilized by a cryptocurrency mining operation that uses proof-of-work authentication methods to validate blockchain transactions…”
Boring mentioned how the bill could have a negative impact on the economy of the state. “Bitcoin mining operations are providing high-paying and high-grade, great jobs for local communities. One of our members, their average pay is $80,000 a year.”
Boring further addressed how New York is a leader when it comes to state legislation. Whether the rest of the country is going to try and copy New York’s lead in this industry is another topic of discussion.
Others in the crypto space are not happy with the possible new law. Former executive director of the Bitcoin Foundation, Bruce Fenton, tweeted, “No government has the right to tell you what software to run.”
Vitalik Buterin, Ethereum founder, agreed with Fenton’s tweet and replied with, “The government picking and choosing which specific applications are an okay use of electricity or not is a bad idea. Better to just implement carbon pricing, and use some of the revenues to compensate low-income users.”
Federal Reserve Chairman Jerome Powell spoke about cryptocurrency regulations in a House Financial Services Committee meeting last week, giving credit to the Russia-Ukraine war as a highlight for the need of regulatory oversight in digital assets.
“[The Ukraine-Russia conflict] underscored the need for Congressional action on digital finance including cryptocurrencies,” Powell said. “We have this burgeoning industry which has many parts to it, and there isn’t in place the kind of regulatory framework that needs to be there.”
Powell spoke to the committee about potential detrimental uses of crypto. He referred to “malicious actors” and “terrorists” as some of those who use digital assets to commit crimes, on top of crypto’s potential to allow Russia to get out of the barrage of international sanctions but against their fiat currency, the Ruble.
“This will be something that we will invest a fair amount of time and expertise … to get it right,” Powell said, emphasizing that “we have not decided to do it.”
“We have this burgeoning industry which has many parts to it, and there isn’t in place the kind of regulatory framework that needs to be there,” said Powell. “It was probably no different with railroads or telephones or the internet, and ultimately what’s needed is a framework, and in particular ways to prevent these unbacked cryptocurrencies from serving as a vehicle for terrorist finance and just general criminal behavior.”
Cryptocurrency is one of the last resorts the Russian regime has left to save their economy. They have been cutoff from western markets and have been removed from SWIFT, the international payments system that facilitates cross border transactions.
Democratic Senators wrote on Wednesday to Treasury Secretary Janet Yellen, in an effort to vocalize concerns that the use of cryptocurrencies could be a loophole around international monetary sanctions against Russia.
“These concerns have become even more urgent given the sanctions imposed on Russia after its invasion of Ukraine,” Sen. Elizabeth Warren alongside other democrats wrote in their letter to Yellen.
Rumors have swirled about the Biden administration announcing some type of government system when it comes to the regulation of digital assets. No such announcement has come about.