China banned crypto last month. And what happened? Bitcoin prices have gone up. Take this, Xi Jinping.
Bitcoin and other cryptos have been rising almost every day this month and are rising again on Monday, so as that old Sunkist tuna ad from the 1970s said … Sorry, Charlie.
As most cryptocurrency investors know, the People’s Bank of China and the National Development and Reform Commission have banned cryptocurrency mining and declared all cryptocurrency transactions illegal.
The question I have often asked, as an investor in Bitcoin and many altcoins is: how long before the Fed kills this market? Is this a serious possibility?
At first I wondered if central banks were just gobbling up Bitcoin and taking it out of circulation. But people I’ve spoken to in the market, including transmitters, have told me not to worry (too much… again). I wrote about it here.
Now let’s move on to the Securities and Exchange Commission. China regulated Bitcoin to bits, then flicked the stop switch as it began rolling out its digital renminbi (RMB). There is no date on it for full deployment yet, but the wheels are moving and it has already been pilot tested in some small towns. Bitcoin, others, are competing for a centralized RMB on a government-controlled blockchain.
The United States has also talked about a digital dollar, although we are further behind on this point. So that largely leaves the crypto in the hands of the SEC, and the SEC has been more friendly to the crypto than hostile.
An example of the SEC’s battle with crypto, of course, is Ripple (XRP). Last month, XRP said “no deal” to settle its dispute with the SEC. That’s because they think SEC Chairman Gary Gensler will drop the case altogether.
On the other hand, Gensler’s SEC is not opening the floodgates for cryptocurrency to become America’s new financial market.
Coinbase was unable to go through the SEC on its plans to expand and create a crypto lending arm, known as Lend. They abandoned him.
“The SEC told us they wanted to sue us for Lend. We don’t know why, ”Coinbase said on September 7. “The SEC told us they viewed Lend as implying a title, but wouldn’t say why or how they came to that conclusion.
The SEC is right. The loan can be incorporated into a title. Wall Street sells loans all the time. People have them in their 401k.
“The loan has become one of the main services in the DeFi sector, gaining popularity this year,” said Evgeniy Butyaev, CEO of the SWT project in Russia. They create a cryptocurrency bank. SWT stands for Smart Wallet Token. “To get a loan, you have to leave a collateral – usually in one of the major cryptocurrencies. Most often, the borrower also receives the funds in crypto. There are several reasons why a crypto loan might be worthwhile. . Traders are often reluctant to close their positions and can borrow to gain access to crypto. Another is to invest in a crypto loan to generate passive income, “said Butyaev.” The (banking) authorities are not fully happy that there are financial transactions beyond their control. “
Things move fast in crypto.
Coinbase has just been made public this year. $ 44 billion Grayscale releases new crypto funds. They created a DeFi exchange-traded fund this summer.
A “Wall Street cryptocurrency” is being built every day, only outside the confines of the usual branded companies in the asset management space. These things are not started by BlackRock and Vanguard.
The SEC can attack these Chinese-style companies.
“Unfortunately, we will see a deeper crackdown,” believes Daniel Santos, CEO of DeFi.Finance, a Woonkly Labs project. Defi.finance is in the space of hybrid finance, aka “HyFi,” which is generally described as a bridge between DeFi cryptocurrency and the old school, centralized financial institutions. “Unregulated challenge products will face challenges. Governments will not allow (crypto-lending) platforms that don’t require know-your-customer and follow anti-money laundering laws, ”Santos said. Woonkly Labs works on DeFI and NFT platforms compliant with European regulators. They are based in Estonia, which has established itself as a hub for crypto start-ups in the eurozone. “Only time will tell what will happen next. “
Everyone knows that a regulatory crackdown is coming. But is it bad?
Gensler has often compared the SEC’s role in crypto to that of a sports referee or traffic policeman. It didn’t scare the market so much. He says it is the responsibility of crypto investors and fund managers to ensure that they comply with “anti-money laundering laws, tax compliance and (be aware that regulators) have a responsibility to the American public. “.
In an interview with former federal prosecutor Preet Bharara at the Vox Media code conference in Beverly Hills on September 27, the SEC chairman said the growing cryptocurrency market makes the measures regulatory. more important today than a year ago. “It won’t end well if it stays out of regulatory space,” Gensler said. “To think that an area that has grown tenfold in the last 18 months – not just in terms of asset values, but in terms of underlying loans and more – that it’s going to stay out of those public policy frameworks and succeed … We’re going to end up with a problem and a lot of people will be hurt. “
Yes, we don’t want a Bernie Madoff erasure of crypto investors. Seeing how quickly and forcefully crypto has risen, I can assure you that many people under the age of 40 now have more money in Bitcoin than they have in their 401k, and may even consider this as a big part of their retirement. I know I’m leaning in that direction.
Most people in the market don’t worry about regulation. They have been asking for it for years. The argument is that Wall Street-style crypto regulation means that crypto is a real investment asset and more investors will buy, which will increase the value of the assets.
“Regulators are and most certainly will expand more into crypto, as we’ve seen recently with Binance in different regions. That’s not necessarily a bad thing,” said Moe Carrim, co-founder and CFO. of Curate, an NFT platform.
“A crackdown can help alleviate many of the industry’s drawbacks, especially as we’ve seen with the DeFi boom and the sheer number of scams. You’ll have to create new monitoring tools that work in a decentralized ecosystem, which is significantly better for a multitude of reasons, like 24/7 service and no need to trust a single company. Crypto is ready to pass regulation if established by a knowledgeable government that understands the technical and economic aspects of cryptocurrency, ”Carrim said. “Like the Internet in the early 2000s, crypto will experience these (regulatory) growth difficulties. With the right tools, crypto will become more transparent, more identifiable, more responsible and more accurate than most centralized financial systems, ”he said.
China tends to scare the crypto world off, giving traders a reason to sell. But, am I wrong here… the world of cryptocurrency is becoming, perhaps, imprescriptible.
Whenever Beijing cracks down on Bitcoin, the common joke is that China has banned the cryptocurrency 18 times already.
Chinese government agencies have issued a series of increasingly restrictive but never conclusive legal bans on various aspects of crypto since 2013, but as Wired UK magazine points out, the Chinese crypto industry has flourished.
“Big things are happening in China right now and for the umpteenth time, China is taking on the crypto industry and the market is changing. The latest crackdown from Chinese regulators was an opportunity to buy the downside and it certainly seems to follow the same pattern, with BTC hitting $ 40,000 over the weekend and quickly recovering to over $ 44,000 ” said Waseem Mamlouk, vice president of capital markets at the Nimbus platform. me when we first discussed this issue almost two weeks ago now. On Monday October 11, Bitcoin was trading at over $ 57,000.
Yeah, take this China!
The growing Chinese crackdown on bitcoin and other cryptocurrencies was always going to happen. The borderless and unregulated nature of crypto runs counter to the Chinese government’s vision for a state-dominated economy. Beijing considers cryptocurrencies to be the epitome of insane guesswork, Wired reported, and I would add – Beijing sees it as a Macau-style game and nothing more.
So set and ban whatever you want. To date, he hasn’t made any serious breaches in crypto. And with Wall Street fully backing this with a fleet of new products and new businesses flowing from it, it’s not going anywhere. The battle for centralization and decentralization will have to be watched for many years to come.
Mamlouk thinks it gets hotter and hotter as technology advances and your crypto is undermined by stateless algorithms. (Maybe even star-level algorithms, from a satellite in space.)
“The real battle will begin when a truly autonomous system is created that can run its own platforms with minimal help from humans,” says Mamlouk, which means that it would be more difficult for a state to target them individually.
“Artificial intelligence will play a huge role and for crypto – it’s a major change,” said Mamlouk. “Any system that can house its servers in the right place and has the ability to move them quickly is fundamentally bulletproof from a regulatory standpoint. What will remain is how these systems stand the test of time from a technological point of view (not regulatory).