US CoinDesk, Unusual Opinion Statement ── Is it okay for the US to crush crypto assets | coindesk JAPAN | Coindesk Japan

When I walk my dog, I often see Harry in his 70s. A former New York City Police Department detective, he feeds stray cats on a nearby walkway every morning. We became friends through animals, but that’s the only place Harry can talk to. He believes in QAnon conspiracy theories and believes America is on the verge of another civil war. He is waiting for that “signal”.

Sometimes I actively respond to what Harry says, and other times I just listen. He also talks about crypto assets while he greets my dogs. I told him a few days ago that the banking crisis and increased regulation are going through tough times for crypto.

Harry reacted immediately. “Did you really think central banks and governments would allow fiat currencies to compete?”

I froze at his words. I found it hard to refute his conspiracy theories.

All-out attack on crypto assets

In just the past few weeks, US regulators and governments have been affected by the pervasive effects of the FTX bankruptcy, with a natural desire to “do something” to push domestic cryptocurrency projects (but not completely neutralize them). It’s getting easier and easier to think that we’re trying to beat them down.

As a conspiracy theory, this would be plausible. Even those in established positions, including former regulators, see the current situation as a coordinated attack.

The administration’s animosity towards cryptoassets has been made clear in public statements, and is accompanied by actual acts of tightening regulation. After years of ignoring industry calls for guidance and regulatory clarity, the U.S. government appears to be launching an all-out assault on all parts of crypto.

The all-out attack also includes a series of enforcement actions by the U.S. Securities and Exchange Commission (SEC) against licensed cryptocurrency companies like Coinbase and Kraken. Last week, the Commodity Futures Trading Commission (CFTC) sued Binance. The Biden administration released a “Presidential Economic Report” last week, arguing that cryptocurrencies are not a useful technology and highlighting a string of crypto-related frauds in recent years.

idealism and cynicism

There are two reasons why I still don’t believe in organized malice. One is based on idealism, the other on cynicism.

First, this is America, the land of opportunity and freedom. A deliberate attack on the economic freedom that crypto assets symbolize goes against American values.

Second, this is America, a country whose infrastructure is crumbling. Leaders can’t even coordinate the efforts needed to repair bridges and tracks. It is too daunting to think that we can cooperate with destroying the financial infrastructure of the future rather than maintaining the existing infrastructure.

Supporting the claim of lack of coordination is that in the Binance lawsuit, the CFTC claims the cryptocurrency Ethereum (ETH) is a commodity, while the SEC and the New York Attorney General say it is a security.

But it may not matter whether the current regulatory tightening is a systematic act of hostility to crypto assets. There are others who believe this, not just Harry. The idea that the United States is making crypto assets an enemy is spreading.

So some companies are considering moving abroad, while others are worried that they may lose or be unable to open bank accounts. Bankers are even refusing to speak at crypto-related events for fear of being targeted by regulators themselves.

Unless the Biden administration’s policies change significantly, the idea that America is anti-cryptoassets will soon become so entrenched that it will be difficult to reverse. This is largely due to the fact that most of the U.S. government’s response has been punitive rather than constructive.

Regulators and the White House need to be clear that cryptoassets have a future in America. There’s no better way to do that than to give the industry the regulatory clarity it’s been asking for.

Blueprints for a better framework have been proposed, such as in the Senate’s Responsible Financial Innovation Act. Most of the crypto industry would welcome such regulatory clarity. But regulators and many politicians seem reluctant to bring such clarity.

existential crisis

CoinDesk rarely takes official positions on specific issues. As I’ve said in the past, we value the breadth and balance of our coverage, rather than offering official views on specific topics.

However, the reason why we decided to present a common view as an organization here is because we thought that we should clarify our position this time. Our editors believe that the threats facing cryptocurrency, whether intentional or not, from the actions of the U.S. government are potentially good, representing technologies and industries that enable economic empowerment. I think that the more we need to clarify our attitude, the more it will affect our survival.

We believe that government attacks on crypto assets will not achieve the goal of protecting the American public from fraud and fraud.

The early reaction to increased regulation is very likely to push innovation out of the United States. For all but the most savvy insiders, then, it becomes difficult to distinguish between outright fraudulent behavior and solid efforts to innovate.

We are alarmed by the signs that tightening regulation is beyond the authorities’ powers under current law and running counter to the spirit of freedom and innovation that underpins America and the world of crypto.

Operation Coke Point 2.0

Regulators appear to be blocking crypto firms from accessing traditional banking services. Former lawmaker Barney Frank, a driving force behind strict banking regulation in the wake of the 2008 financial crisis, said he wanted to send a “very strong anti-crypto asset message” to regulators. Signature Bank, which served as a director, claimed to have been forced into liquidation by the New York State Department of Financial Services (NYDFS). NYDFS denies it.

But the claims appear to be backed up by recent moves by the authorities.

Reuters reported on March 16 that the Federal Deposit Insurance Corporation (FDIC) is contingent on the sale of Signature Bank to abandon its cryptocurrency business. The FDIC denied the reports, but once the sale took place, crypto-related clients were actually excluded from the acquisition.

He likened this approach to Operation Coke Point, an Obama-era policy that pressured banks to keep “legal but politically undesirable businesses” such as gun manufacturers and payroll lenders from doing business with them. Some call it Coke Point 2.0. These measures not only circumvent due process, but repeat mistakes of past administrations that have been criticized harshly by both the legislature and the legal system.

Surprisingly, current FDIC Chairman Martin Greunberg was the driving force behind the original Operation Coke Point.

Operation Coke Point eventually faced a number of lawsuits and hearings, largely settled on government abuse of power. To settle various lawsuits, the FDIC promised internal reforms to prevent regulator overreach against legitimate businesses, including ending the practice of tacitly interfering with banks on customer choices. I doubt now how sincere that promise was.

CoinDesk is working hard to uncover the true story behind recent events and determine if it was a coordinated effort to harass the cryptocurrency industry. But even before the full picture is revealed, the abuse of government power is reason enough to sound alarm bells.

indiscriminate carnage

What appears to be an implicit anti-crypto agenda must be distinguished from legal action against some scammers preying on the crypto world.

We are well aware that cryptocurrencies, like many pioneering technologies before them, are extremely attractive to fraudsters. I applaud criminals such as Do Kwon and Sam Bankman-Freed being prosecuted and possibly jailed.

At CoinDesk, we are actively working to stop fraud. CoinDesk’s award-winning journalists played a major role in exposing FTX’s massive fraud. Moreover, we warned investors to be vigilant even before the collapse of crypto lending firm Celsius Network and Kwon’s Terra.

But not giving crypto developers the tools or giving crypto service providers the ability to manage US dollars in American banks is not anti-fraud. It’s like a bomb that causes indiscriminate carnage.

Failure to establish a clear framework for regulated cryptocurrency issuance also makes it more difficult for consumers and law enforcement to prevent fraud. Because the most virtuous cryptocurrency projects lose the means to maintain their legitimacy.

cascading risk

Efforts that seem to try to suppress crypto-assets also have a large knock-on effect. Bankers are reluctant to speak publicly about crypto assets or participate in debates, fearing conflict with regulators. Getting central bankers to speak publicly is nearly impossible.

As a result, talking about the future of the industry risks repeating voices in favor of crypto instead of being a source of real truth and real innovation.

In addition, there is a risk that crypto assets will be politicized. The crypto community has often shunned partisan politics, preferring to stick to the spirit of freedom and individual autonomy.

In fact, constructive, bipartisan crypto bills were largely the norm. The sweeping bill by Republican Senator Cynthia Lumis and Democratic Senator Kirsten Gillibrand is a prominent example. But the view that the regime is anti-cryptoassets is destroying open collaboration. Individuals’ opinions of crypto assets may one day become dictated by their political affiliation. There are no winners in such situations.

Crypto-assets certainly have real-world utility and benefits, such as providing an alternative option for providing financial services to people around the world suffering from oppression and violence. For example, it was crypto assets that made it possible to deliver $100 million in immediate donations to Ukraine after the Russian invasion. Donations were delivered faster than through more formal government channels.

In addition, crypto assets are a core supporting tool for resisting the dangerous concentration of power in the digital world in the hands of companies that use large amounts of data and have turned surveillance and censorship into their main business. It also exists. The worrying rise of surveillance capitalism is now a clear concern for many lawmakers who feel banking regulators are encroaching on their power.

Much like tech stocks, speculation drives much of the trading of cryptocurrencies, but their prices are also driven by real demand from current users. Billions of dollars of value circulate around the world every day on the Bitcoin network.

not american

Bitcoin (BTC) and many other crypto assets will survive comprehensive and indiscriminate regulatory tightening functionally intact. That’s what crypto assets are all about. Cryptocurrency systems were created with the goal of giving individuals control over their destinies in the digital age, independent of government and corporate structures.

Cryptoassets, in short, test the principle of restraining government power that lies at the heart of the American psyche. Freedom of religion, freedom of speech, and other rights guaranteed by the U.S. Constitution are a blueprint for spreading freedom around the world. It has helped millions of people increase their prosperity, happiness and wealth.

Protecting those rights seems a given to many Americans today. But it was once considered dangerous and destabilizing by those in power. Even now, even in America, authoritarians are reverting to old habits and chasing the illusion of safety through censorship and restrictions.

Considering these realities, making economic autonomy as a matter of course protected in a democratic society as freedom of speech and freedom of religion is unlikely to be a grand project that will take years. Clear. Instead, if the government really wants to impede that progress, it should publicly declare its purpose and do so through transparent, democratic means.

I hope my conspiracy walking buddy Harry is wrong and the Biden administration isn’t trying to kill crypto. If so, the White House needs to make his positive intentions clear.

For example, support a bipartisan effort to require the SEC to have clear guidelines for crypto assets. Given the erupting and pervasive cynicism over heavy-handed government action against crypto, there is no other way to persuade the crypto industry that it does not need to flee the United States for safety. deaf.

Prove Harry wrong.

Kevin Reynolds: US CoinDesk Editor-in-Chief

｜Translation and editing: Akiko Yamaguchi, Takayuki Masuda
｜Image: Shutterstock
｜Original: CoinDesk Editorial: It Sure Looks Like the US Is Trying to Kill Crypto