As central banks around the world continue to develop and trial their own regulated currencies and digital dollars (CBDCs), many investors have been forced to constantly acknowledge this unfortunate reality: will decentralized cryptocurrencies get squashed and greatly mitigated, to the point where they lose most if not all their value, or just outright prohibited from trade?
These are legitimate questions that the average Joe and investor on Wall Street have but no real surety on the matter.
Bitcoin, other large crypto players, and NFT markets, have all faired quite poorly this year, as the fears of mitigation and prohibition continue to ominously haunt the minds of said investors, day traders, “crypto dGens,” and the ordinary consumer.
The WinePress published an article from The Trends Journal last year, tackling some of these questions: “What Will Happen When Cryptocurrencies Are regulated And Banned?”
Since then, the insanely wealthy company Blackrock partnered with Coinbase, the largest crypto trading network in the world, which provides them backdoor access to these currencies. This does not automatically mean that they will openly control them somehow, but it should at least be noted.
But now it seems the Securities And Exchange Commission (SEC) is standing resolute in watching the crypto space like a hawk, and peradventure could do even more to really mitigate the market space.
The Trends Journal has more on the story, and gives their opinions on it:
Despite crypto firms’ persistent complaints that the U.S. Securities and Exchange Commission (SEC) is unfairly targeting them for scrutiny, the agency will not reduce its oversight, SEC enforcement director Gurbir Grewal said on 9 September at a Washington conference.
The SEC has a duty to protect naïve, poor, and minority investors, Grewal added.
Crypto’s recent crash has disproportionately damaged those investors, who often were drawn to digital assets because the conventional financial and investment markets have ignored them, he said.
Critics are upset because we’re not giving crypto a pass from the application of well-established regulations and precedents.
If we’re going to uphold our mandate, we can’t simply abandon the field when we confront potentially novel issues. Non-enforcement would be a betrayal of trust [and] that’s not an option for us.
At the same conference, Olivia Choe, the SEC’s chief litigator, touted her office’s record of suing crypto firms that skirt the rules and promised to continue to “litigate aggressively.”
The day before, SEC chair Gary Gensler repeated his assertion that most crypto should be considered as securities, which brings them under the SEC’s regulatory control.
However, the SEC’s “regulation by enforcement” is an “undeniable feature of the SEC’s effort to expand its own jurisdiction beyond the bounds of the law,” Jake Chervinksy, policy chief at Blockchain Associates, a crypto lobbying firm, told The Wall Street Journal.
He accused the agency of “refusing to provide any guidance or propose any rules clarifying how upstanding crypto companies can meet its expectations.”
Tom Emmer, a Republican member of the House of Representatives from Minnesota, has echoed the charge, saying Gensler has overstepped his authority in his attempts to impose rules on crypto firms.
Gensler has urged Congress to pass legislation authorizing his agency to regulate crypto but Congress has yet to act.
Rostin Behnam, chair of the U.S. Commodities Futures Trading Commission, also has asked Congress to give his agency a hand in overseeing crypto, as we reported in “CFTC Seeks Authority to Regulate Crypto” (15 Feb 2022).
TREND FORECAST: By permitting Bitcoin ETFs to trade in the U.S., the SEC already has staked its claim to overseeing cryptocurrencies.
A broader regulatory structure will be imposed, though Congress will have its say at some point.
The crypto industry itself is calling for regulatory clarity. The extent of government oversight will be closer to what Gensler and Behnam are suggesting, but probably less than either would like.
With regulation, the Street will be more ready to accept stablecoins and other classes of digital coins.
Regulations will take shape in parallel with central banks’ creation of CBDCs. Whether the U.S. will limit itself to regulating cryptos and stablecoins, or launch a “retail CBDC” (ie. a CBDC meant to be directly used and held by consumers) is still a very open question.
AUTHOR COMMENTARY
[4] Labour not to be rich: cease from thine own wisdom. [5] Wilt thou set thine eyes upon that which is not? for riches certainly make themselves wings; they fly away as an eagle toward heaven.Proverbs 23:4-5
I tend to have cynical and pessimistic viewpoint on most things in life, and cryptos are no different. Regulars know that I am rather cautious of these cryptos and NFTs. I think a strong majority of the entire space are laden with Ponzis and pyramid schemes.
Remember: central banks could have put a stop to them as soon as Bitcoin started gaining momentum a little less than a decade ago. They did not, and the sole reason, I believe, was to allow people to get used to the idea of digital currencies, wallets, and cashless transactions; solidifying that agenda for the broad masses, even if most people did not invest in a single crypto.
It is still too early in my view to tell what and when will occur, but, simply put, central banks will allow zero competition: not happening. Therefore, I believe severe and crippling regulations are coming to the cryptosphere.
Howbeit, IF, and this is an IF: these cryptos and NFTs could be directly ported to the metaverse and augmented reality systems, and used in the metaverse, and people who are currently invested do not have to give-up their crypto and virtual assets; which could be a great ploy to get people to hop into. In other words, you have the regulated CBDC used for real transactions, and the decentralized currencies for the metaverse. This is all pure speculation on my part, based on what I have read in numerous articles about the metaverse.
NFT Expert Says Poor People Will Serve As ‘Real-Life NPCs In Games And The Metaverse
[7] Who goeth a warfare any time at his own charges? who planteth a vineyard, and eateth not of the fruit thereof? or who feedeth a flock, and eateth not of the milk of the flock? [8] Say I these things as a man? or saith not the law the same also? [9] For it is written in the law of Moses, Thou shalt not muzzle the mouth of the ox that treadeth out the corn. Doth God take care for oxen? [10] Or saith he it altogether for our sakes? For our sakes, no doubt, this is written: that he that ploweth should plow in hope; and that he that thresheth in hope should be partaker of his hope. (1 Corinthians 9:7-10).
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