Crypto in the USA, Part I: Introduction | Cointelegraph Documentary

We are right now packaging up with a company where you can spend crypto and fly in a helicopter to the Grand Canyon and on the way back shoot machine guns out of it. So we're making it fun and we get this.

It's not a big deal to buy any assets, real estate, shares, yachts, private jets, whatever, wherever you want.

You know, it can be used for illegal activity and actually is used for illegal activity more than anything else in the world.

I think that our government is quite confused.

This is madness.

It needs to stop. So shame on the US Crypto is not illegal in the United States.

The United States of America, the richest economy in the world, where every kind of business activity can prosper, protected and guided by a well established structure of laws and regulations. So companies are secure, investors are secure, and everybody understands the rules of the road. Except when it comes to crypto. Here, confusion and contradiction are rampant. The Federal securities and Exchange Commission defines cryptocurrencies as securities. The Commodities Futures Trading Commission treats them as commodities like wheat or pork bellies. The Internal Revenue Service sees cryptocurrency as property. And the Financial Crimes Enforcement Network thinks crypto is money. We decided to travel around the USA to find out if the people are as confused as the government. And we met some interesting characters along the way.

Well, I'm the Nicky Cowboy.

I don't take bitcoin. I'm the Nicky Cowboy and I'm swinging my lo.

Recently we discovered something interesting. The world's first crypto club in Las Vegas. It was featured in various ads and articles. Seriously? The first one in the world. The headline said, if you own crypto, it's the only place in the world you can spend it for something you actually want. So of course we decided to go and have a look. Las Vegas. The city you either love or hate. People lose fortunes here in a matter of hours. They party for days with enough alcohol and drugs to get a small city high. Everything here is more. More casinos, more buildings, more Ferris wheels and the Bellagio Hotel. So we're here at the Bellagio.

Where.

Inside is apparently the Moore nightclub, which is a secret cryptocurrency taking nightclub right here in the center of Las Vegas. So we're gonna go in and check it out and see if it can redeem the terrible time we've had in this terr. We were asked to wait in front of it. Everything looks solid. Security guards with headsets dressed in white shirts and ladies in cocktail dresses. We're invited inside. So this is the Hyde Club, inside of which is the mysterious Moore Club. So where is this crypto club? It quickly turns out it's just a small, separated part of a dance floor. There's a couple of tables behind a golden chain. He takes us to a special area that is closed for regular visitors. It's a small area opposite the iconic Bellagio fountains.

Through crypto, you can get a suite in Bellagio or wherever.

We are greeted by Sean Chester, a Las Vegas nightlife industry veteran and president of More Management.

We'll put you up at the Bellagio where we try to stay. You can rent a limousine. You can rent a Ferrari, a Lamborghini. Yeah, you got to have a Lambo, right? We are right now packaging up with a company where you can spend crypto and fly in a helicopter to the Grand Canyon.

But what about the world's alleged first crypto nightclub? It might be possible to pay with crypto there, but most of the guests don't even know that. They're just partying hard and all of the prices are in dollars. Do they all pay in crypto when they come?

No, you don't have to. You can. It's always an option, but you take cash, credit, or crypto.

So why does Sean Chester need all of this, the first crypto club, which is just a nightclub, a separate crypto area? Sean gives us an honest answer.

We're doing our job and we love it. It's part of our. It's a lifestyle now. It's a lifestyle.

Cryptocurrency.

Cryptocurrency is a lifestyle, and I'm lucky enough to be able to be a part of blending it into both world.

Lifestyle. This is why crypto attracts so many people. Crypto in the US is becoming a lifestyle. Even lawyers are joining the crypto party.

I think it's the most fascinating thing I've ever done.

Here's Joshua Klayman, a former corporate lawyer who is today the founder of Klayman llc, a boutique blockchain law firm.

For many years, I was a leveraged finance and corporate lawyer. I also did other types of law, but all transactional in nature. They were all types of law where being creative was not necessarily a good thing. Like someone once told me as a junior associate, the last thing that any person, any client needs is a creative securities lawyer. And when you look at it in this space, it's totally the opposite.

Even in terms of definition, the main four US agencies regulating crypto assets cannot come to an agreement. While the SEC defines cryptocurrencies as securities, the CFTC considers them commodities, allowing Crypto derivatives to be traded publicly. By contrast, the IRS sees crypto as property. Finally, FinCEN defines crypto exchanges as money exchanges, thus implying that cryptocurrencies is in fact money. Complicated, huh? It is a little. You can call it a coin, but if it functions as a security, it is a security. Stay tuned if you want to watch more documentaries like this, like press the bell and share this video with friends. With your support, we can continue making such films. Due to the unclear and at times contradictory regulatory framework, it has been extremely difficult for crypto companies to operate in the US without incurring heavy penalties. And the situation is not getting better. In 2018 alone, the SEC carried out 18 crypto related legal actions, compared to just five in 2017. Although all this does not prevent serious people from doing serious business.

What about people who want to do serious business in the United States with cryptocurrency? For a look at that, we traveled to San Francisco, the home of startups and investment companies. We have already told you about Ripple and for example, Blockchain Capital. Look at those videos on our channel. But now we want to tell you something else. Mindrock Capital became famous for buying a church that has turned into a tech space they call the hack temple. Roman Sapachevsky is the managing partner of MindRock. Among other things, his company helps people convert crypto assets into conventional assets. Real estate, yachts, private jets, whatever.

Crypto is not illegal in the United States. First of all, people can receive payments in crypto, people can send payments in crypto, people can transfer crypto from one person to another, etc. So it's not prohibited at all.

Even so, there are problems.

When you open a bank account for a crypto company, the bank can say no, and usually banks say no.

If you tried to convert a million dollars worth of Bitcoin on an exchange and then transfer that money to a bank account, your account would most likely be blocked immediately. The bank would ask you to provide documents to prove that the money is legal and that you are not involved in criminal or terrorist activities or money laundering.

Because of the high volatility, it's very difficult to build successful business without proper business planning. And you cannot do proper business planning with underlying currency that fluctuates tens of percent a day when the dollar shows historical rates of inflation, let's say the average of 3% a year. So I can be very, very conservative and predictive in my business modeling when I use $, but it's very difficult to use crypto. So this involves a lot of risk So I need to transfer this risk to someone like customers. But in this case, customers will pay more. So unless all the people will have benefits, there is no wide adoption.

There are many problems with the way cryptocurrency and ICO markets are operating. But two are worth particular attention. First, the markets for these products have substantially less oversight than our traditional securities markets. Second, many ICOs are being conducted illegally. Their promoters and other participants are not following our securities laws. Some say this is because the law is not clear. I do not buy that for a moment. There are some technologies that the IRS.

Is utilizing to be able to track cryptocurrency transactions. There are a lot of different ways.

To hide these transactions that it's just going to be another cat and mouse game, I'm afraid. In regards to taxes, by the way, what topics would you like to see a documentary about? Let us know in the comments. Part of the problem is the association that many people have between cryptocurrency and shady or illegal activities. Oh yes, our parents still think that Bitcoin is only used to buy guns and drugs. Well, just joking. We've explained to our parents what crypto is. But many politicians and members of the public think that we still live in the world of Silk Roads. No one can be used for illegal activity and actually is used for illegal activity more than anything else in the world. Jeremy Gardner, a young well known Bitcoin millionaire, sat down with us in Las Vegas. Yes, again in this terrible city. Jeremy has pointed out how illogical that preconception is. A hundred dollar bills, Benjamin's. I mean, more than 80% of black market activity is used with American hundred dollar bills. Should we go and ban the dollar? I don't think anybody in their right mind would argue that. I mean, maybe I would because then Bitcoin would go up, but come on, I mean that's just an absurd statement. While the federal government seemingly runs in four directions at once, the State of New York, which is of course the home state for many major banks, and the New York Stock Exchange has just created a cryptocurrency task force to study the regulation, use and definition of digital currency. We're happy that the governor, Governor Andrew.

Cuomo signed into law to be able to put together a cryptocurrency, what we call it a digital currency task force.

State Legislator Clyde Vannel chairs the Subcommittee on Internet and New Technologies. News of his actions quickly spread through.

The community where we were going to get stakeholders from around the industry, from technologists to exchanges, to coins, to investors, to consumers to the New York State DFS to be able to get in a room to help figure out what the proper level of regulations are.

Some crypto ventures may thrive on uncertainty or the gray areas of the law, but most would be happy if this situation were clarified. The securities and Exchange Commission has been considering proposals to create a bitcoin exchange traded fund. So far, no decision.

The government has obviously gotten a lot more interested in cryptocurrencies in the past year.

We met in New York with Candace Farrington, who is involved with the development of a token to pay for points and thus is possibly not the ideal spokesperson at a congressional hearing.

I don't think they're going to do anything quickly because I think they don't want to mess it up. The IRS has recently decided that we have to pay capital gains taxes on cryptocurrencies, so they don't want to mess that up. They're getting something out of it, but at the same time, they know that the technology has the power to completely disrupt everything that they are. So they're being very careful with it. I've not made a dime in FIA in almost a year now. I really don't want to either. I prefer to keep everything out of someone else's hands. I prefer to keep my money in my pocket and knowing that it's mine and not having to trust another entity to hold it and control my access to it.

Meanwhile, on Capitol Hill, some US Senators are also attempting to improve the crypto environment in the country. In December last year, two bills were introduced aimed at preventing price manipulation and improving the regulatory framework. However, the process is still at an early stage. According to experts, a possible way out of this mess would be adopting a flexible approach regulating each cryptocurrency on a case by case basis.

There is a reason why companies want to go public on the New York Stock Exchange over other parts of the world.

Ton Vaes, a former Wall street trader, explains why many crypto startups are still.

Coming to the US because they trust that legal system. They trust it. I mean, if you look, you can go public on the Russian exchange, you can go public on the Indian exchange. Go ahead and do it. But most people don't want to do that. They want the security of the US.

Legal system while the US government figures out exactly how it wants to proceed. We could do a little worse than wait things out at the alleged crypto nightclub in Las Vegas where Sean Chester brought out a couple of patrons to convince us of the club's bona fides. Have you Ever heard of bitcoin? Yes. Have you ever heard of blockchain? No. How do you think people get bitcoin? Where does it come from? Honestly, I have no idea. It's mining. So the reason we're here is because this club, a certain section of it more takes cryptocurrencies. So have you ever paid for anything with cryptocurrency here or anywhere? Do you ever plan on it? No. Do you ever want to buy bitcoin? I actually do have some. Oh, you do? Yeah.

One of the things I've learned recently is that America's libraries are a place where a lot of people go and research bitcoin. In fact, they use the library computers. One of the most frequently searched items from a library computer is bitcoin. And so we're teaming up with CFPB to go out to America's libraries to educate librarians who often get some of the questions asked, to be able to direct library patrons to use our resources, our bitcoin website, and other resources.

So cryptocurrency has arrived on American shores. All it awaits now is a proper response. Perhaps it starts here after all. But however it develops, we'll be there to show it in our next episode. So stay tuned.

Stay tuned. If you want to watch more documentaries like this, like press the bell and share this video with friends. With your support, we can continue making such films.