A16z Annual Crypto Report: The Three Major Cryptocurrency Regulatory Changes in the U.S. This Year

The A16z, a U.S. venture capital firm, recently released its 2024 Crypto Annual Report, which highlights cryptocurrency and regulatory policies as hot topics of discussion during the U.S. election. The report further delves into significant changes in virtual currency regulations by the U.S. government.

Bitcoin and Ether ETFs Officially Approved by Government

On January 10th this year, the U.S. SEC officially approved Bitcoin ETPs (Exchange-Traded Products), with ETF as the formal registered name. On July 24th, Ether ETPs were also issued. The issuance of ETPs did not immediately stimulate the prices of BTC and ETH, but it symbolizes that virtual currencies and digital assets have been recognized by mainstream institutions and can be legally invested in under government regulations.

Wyoming Passes DUNA Act, Opening up Tax-Friendly Opportunities

On March 7th, Wyoming Governor Mark Gordon signed the DUNA Act into law. DUNA, besides demonstrating Wyoming's support for blockchain innovation, provides solutions for the challenges faced by decentralized organizations, even redefining the innovative structure of DAOs.

The new structure for DAOs, called Decentralized Unincorporated Nonprofit Associations (DUNA), allows DAOs to maintain their decentralized nature in legal compliance. DAOs have been seen as a new variant between corporations and nonprofit organizations. Interestingly, the DUNA Act includes a crucial agenda; DUNAs can convert into limited companies, acquire, hold, and transfer real estate in the name of DUNA, operate for profit while maintaining a "nonprofit organization" status.

As early as 2017, the SEC recognized DAOs as decentralized organizations but cannot exempt them from being unregistered securities. The SEC believes that issuing and registering securities or stocks in the U.S., regardless of subscription in U.S. dollars or cryptocurrencies, should be subject to U.S. securities laws.

The Commodity Futures Trading Commission (CFTC) holds a similar view on DAOs. CFTC believes that DAOs cannot be considered legal entities, but rather a group of individuals. Through the form of DAO, DUNA transforms into a non-legal entity nonprofit organization.

Wyoming, which has traditionally supported the Republican Party and Trump, is home to many hidden millionaires despite its small population of only 560,000 residents. There are many discussions online about why millionaires are attracted to this barren land that still seems to be stuck in the wild west cowboy era. The wealthy residents of Wyoming are not locals but migrants from elsewhere. The state is full of desolate towns with no one around, just barren mountains and open land, perfect for skiing in the winter. Since the start of the pandemic, a large influx of people moving from New York and Los Angeles has been aggressively investing in real estate.

Wyoming's official website claims it to be the most business-friendly state in America, with almost no taxes required, exempting corporate taxes, personal income taxes, property taxes, sales taxes, value-added taxes, warehouse taxes, franchise taxes, and more. Recently, the real estate market in Wyoming has been hyped to new highs, with the average annual income of residents in Teton County, Wyoming, being $100,000, while the average property registration price reaches $7 million. The provisions on real estate buying and selling investments passed in the DUNA Act are particularly intriguing in this context.

According to Wyoming's blockchain report, since 2016, the Wyoming legislature has enthusiastically embraced blockchain and cryptocurrency, and has been the first state to support the Token Taxonomy Act.

The virtual currency mining company Elite Mining Inc relocated to Cheyenne, the capital of Wyoming, in 2021, claiming to mine with renewable energy.

Interestingly, in a Google Trends report compiled by A16z, searches by Wyoming residents for Bitcoin and Ethereum have declined rather than increased, indicating that Wyoming residents seem to have understood the principles of Bitcoin long before. Under the U.S.'s state autonomy, Wyoming may become a popular region for registering DUNAs next year.

FIT 21 Act Promotes Transparency in Political Donations

In May 2024, both the Democratic and Republican parties supported the passage of the FIT 21 Act (21st Century Financial Innovation and Technology Act). The Act aims to provide clear and transparent regulation for cryptocurrencies, protecting entrepreneurs and investors from financial harm and preventing future sanctions and lawsuits by the SEC.

The passage of the FIT 21 Act before the U.S. presidential election holds significant importance. According to Reuters, recent data indicates that half of the political donations made by companies to political parties come from cryptocurrency companies. The U.S. House of Representatives passed the proposal on May 22nd, with support from cryptocurrency companies such as Coinbase, The Block, and Digital Currency Group, aiming to advance transparency in political donations before the year-end elections, reducing the hassle of post-election reviews by the SEC and CFTC.