INTRODUCTION:
Investors are looking for a turnaround in the cryptocurrency market following the 2022 crash after that awful year. In fact, the value of all cryptocurrencies worldwide has increased, rising from $835 billion in December 2022 to $1.18 trillion in February 2023. It doesn’t necessarily mean that the Feds have lost track of all the bad things that happened in 2022, though. The Feds are attempting to introduce standards, regulations, and responsibility to the crypto world, as writer Eli Amdur describes in his story below.
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If you’re a cryptocurrency executive, entrepreneur, or any kind of mover and shaker in that arena, you’re probably not very happy right now. You were hoping – and planning – for a 2023 bounce back from 2022, which was a disaster of a year, as we all know.
After a precipitous fall in the global value of cryptocurrency – from a high of $3.2 trillion in November 2021 to a crash landing of $835 billion in December 2022, a 74% drop – you’ve seen a bit of an uptick to $1.18 trillion. So you’re moving ahead. Given how you’ve been able to maneuver the supply of the currency, control the mining of it, and manipulate the trading of it – well of course, you’d have reason to anticipate a big year. Maybe not a Sam Bankman-Fried year, but big, nonetheless.
Regulations … Finally
Well, no sooner did you restart the party, than some unexpected guests showed up: regulators and other government officials – all of whom were long overdue. And they’re not going to leave. Given the way you’ve operated all along, is this any surprise? You may not have seen this coming yet, but wasn’t this the other shoe that hadn’t yet dropped? You had to know this would happen sometime, right? Just not now. Not until some more monkey business could occur, right?
Do not think me naïve. I know as well as anyone that cryptocurrency is here to stay. That’s why the future never looks like the past. But I also know that while a select few made mountains of money on the crypto exchanges, a whole lot lost their shirts faster than they could order a new one on Amazon Prime. In any market or exchange, there are winners and losers – as The Grateful Dead remind us in St. Stephen: “Talk about your plenty, talk about your ills; one man gathers what another man spills.”
So why did the regulators from the S.E.C. show up? And why did they levee fines and other penalties against crypto lending firms? At the same time, why did federal banking officials issue stern policy statements making it harder for you to participate in mainstream banking systems? And why, if you’re not naïve either, can you expect more intensified steps?
Rules: How inconvenient!
Because you haven’t played by the rules, and the few rules you have are hardly rules at all, letting this all become, as you like to spin it, transparent and decentralized. That depiction stounds good to the gullible, but in truth opens up all kinds of tricks by shady and/or nefarious players (Bankman-Fried is not the last). And that line about decentralization, who falls for that? There is plenty of historic evidence supporting the concept of centralization, and here’s some of it.
The 5,000-Year Success of Currency
In the 5,000-year history of currency, decentralization was never what made it work. The success of currency – and of currencies – was the trust that two or more parties in a transaction had in the enduring value of currency – and in who was handling it. It wasn’t people like Sam Bankman-Fried or organizations like FTX.
Around 3,000 BC in Mesopotamia, when currency was established as a representative of equivalent value, great care was given to its stewardship. Standards were set and met, Regulation and accountability were respected. Repositories of currencies – in the form of grains, perhaps – eventually became the forerunners of what we call central banks, enabling the trade routes. In all, the success of currencies through the years was not achieved by decentralization, but by making currencies more aligned with one another. Over these five millennia, global institutions and systems were built, and have they been exemplars of honorable behavior? C’mon. But they also were not leading us to the Apocalypse, either.
Crypto executives and industry associations are circling the wagons, claiming they’re under attack – a prime example of chutzpah. That, in case you don’t recognize it, is the Yiddish word for nerve, actually, unmitigated gall. The classic example of chutzpah is the man who murders both parents and then pleads to the court for mercy because he’s an orphan.
For cryptocurrency to remain a player in the global financial system, regulation and compliance is a must. Otherwise, a swarm of angry and insatiable government watchdogs and regulators just aren’t going to go away.
Some party.
