The US Sec takes crypto regulation seriously; Fork on the horizon

• The announcement of Coinbase Wells was a regulatory rocket
• SEC chairman A FinTech expert
• protect the public or defend the status quo?
• Money: The root of power
• await you a level of regulation; Fork on the horizon

regulation is a delicate topic for global assets and the markets on which they are traded. Before the global financial crisis in 2008, regulating the raw material markets was not what it is today. Futures markets were regulated and US market participants had to be careful when trading abroad.

The Foreign Corrupt Practices Act from 1977 prohibits US citizens and companies to bribe foreign government officials to use their business interests. The law disadvantaged American raw material dealers and raw material producers-as well as consumers-to many other countries.

In many production countries there is no separation between state and raw material production. The only way to do business in many of these areas was to violate the law and put the business in the hands of other market participants, especially from China and other countries.

The Dodd-Frank Act tightened the regulation beyond the appointment market in relation to physical swaps and other transactions. In the past few months, retailers have been charged and convicted of spoofing and other crimes that are now economic crime.

The regulatory umbrella has expanded in recent decades. It is only a matter of time before it throws shadows about the burgeoning asset class of cryptocurrencies. In addition, cryptos threaten one of the critical energy sources of the government, the money supply.

We should expect strong regulation in the coming months and years. The higher the market capitalization of the crypto investment class increases, the faster the rules appear. We have just experienced what the first shot could be in front of the bug when the Securities and Exchange Commission (SEC) Coinbase (Nasdaq :) sent a letter in which she warns to launch a new crypto product.

The announcement of Coinbase Wells was a regulatory rocket

on September 7, the day on which the state currency was officially accepted, the price of the leading cryptocurrency reached its latest high and turned down.

Source: CQG

As the daily chart of September emphasizes, the leader of the crypto package recovered to a short-term high of $ 53,125, turned over and fell to a low of $ 43,704, which was a declining key reverse pattern on the daily and weekly charts for the week on September 7th. Bitcoin followed down and reached a lower low at $ 43,310 on September 13th

One of the reasons why Bitcoin fell by 18.5% on September 7, Coinbase, the leading cryptocurrency exchange, has received a Wells announcement from Securities and Exchange Commission, in which the SEC intends to sue Coin because of its coinbase Lend program in court. With lend, customers who own crypto tokens can give them to other market participants, which creates a return or an interest rate for Bitcoin and other cryptos that are offered on the coin base exchange.

The Wells Mitung warned Coinbase that the company should think twice before introducing its Lend program. In addition, it was a regulatory rocket at the asset class that exceeds coinbase.

SEC chairman A FinTech expert

Sec chairman Gary Gensler is the former chairman of the Commodities Futures Trading Commission. He presided for the CME and other appointment exchanges to write down Bitcoin futures in December 2017. While the list was made at the CFTC after his term, the application was examined during his term. As CFTC chairman, Mr. Gensler Fintech and the cryptocurrency revolution seemed to be welcomed.

Before he was appointed Secer, Gensler taught at the Massachusett's Institute of Technology. The topic was fintech. Cryptocurrencies and blockchain are the heart and soul of the evolution of the fintech revolution.

Some market participants logically believed that the chairman Gensler would be a crypto full at the Sec. However, a political agenda could outdo the development and acceptance of FinTech.

protect the public or defend the status quo?

The Sec and other powers in Washington have explained that they want to protect the public from an un -regulated cryptocurrency classification class. Many call the shameful use of cryptocurrencies, including their benefits for hackers who use ransomware to attack systems in the USA and worldwide.

In 2021 we have already seen a hack in the colonial pipeline and the leading US meat packaging work. The US government has expressed concerns that cryptos enable criminal powers to act outside their reach, which creates risks for companies and individuals.

The first regulatory rocket came in the sense of the "protection of the public". However, it is more of a defense of the status quo.

money: The root of power

We all know the saying " money is the root of all evil ", which comes from the New Testament of the Bible, " because the love of money is the root of all evil."

For governments, money is the root of power. The possibility of expanding and reducing the money supply became much easier after the gold standard was given. During the global financial crisis in 2008 and global pandemic 2020, governments dramatically expanded the money supply to stabilize the economy.

If cryptocurrencies would replace Fiat currencies, this would restrict or end the government's ability to tackle events with monetary policy. Ideologically, the crypto revolution is a challenge for the control of the money by the government, since the aspiring asset class embodies a libertarian approach and returns the power to the individual at the expense of governments.

to expect governments to give up control over the money supply is naive. Last week the famous hedge fund manager Ray Dalio said about the regulatory authorities and Bitcoin:

“ I think if it is really successful, you will kill it at the end of the day and try to kill it. And I think you will kill it because you have methods to kill it. ”

The quintessence is that the SEC Wells announcement sent to Coinbase could be the first rocket in a war funded by the government against the asset class on political instead of regulatory reasons.

you can expect a level of regulation; Fork on the horizon

I assume that the investment class of cryptocurrencies will be significantly split, since the SEC, congress and other US government authorities and branches sink their regulatory claws into the investment class and their technology. There is no doubt that blockchain technology has ubiquitous benefits and acceptance. The tokens, not so much.

cryptocurrencies will probably be the first stage on the risk scale and experience the toughest regulatory treatment. Bitcoin and the leading digital currencies belong in this class. Stable coins that are bound to underlying assets and digital currencies that are issued by governments are probably operated under a much more looser regulatory regime.

I consider the Wells announcement as the first regulatory step in a chess game that will develop in the coming months and years. With every correction on the cryptocurrency market, the government will probably hope that it will disappear.

Every time it returns more and reaches new highs, we will probably experience increased regulatory and state control. While an overall market capitalization of just over $ 2 trillion is not systemic risks to the financial system, market capitalization of $ 10 trillion is a different story.

await you more rockets that cause increased volatility. The market acceptance of crypto continues to grow, but the governments are ideologically on the other side of the argument.

money is the root of power, because control over the wallet is a crucial control element. Do not expect the governments to look away when market capitalization increases.