- The U.S. Government vs Crypto.
It's a battle that's been brewing for years and
it feels impossible to put your finger on
whether the government loves it or hates it.
Are they looking to control everything?
Will they make Bitcoin illegal?
What about digital dollars?
A Biden meme coin?
As confusing as it is, we have some major news that came out
and I wanted to really take some time to
figure out what it means for us and our wallets.
Back in March, President Biden issued an executive order
on the responsible development of digital assets.
This was essentially the green light for
government agencies to start digging into the
risks and opportunities of digital assets.
Most people cautiously welcomed the idea of
bringing this industry under control,
but with a new earth-shattering crypto heist every month,
regulation could definitely help attract more investors,
which crypto could use right now.
It could be great.
It's been six months since Biden gave that green light,
and the results are back.
So is it time to celebrate?
Or is it time to sell your crypto
before buying it back again using a VPN?
At first glance, the new report uses
a lot of words to say a few important things.
So let me save you the time in reading it.
The agency has looked at six main areas:
Consumer and investor protection,
promoting financial stability,
countering illicit finance,
U.S. leadership in the global financial system,
financial inclusion, and responsible innovation.
So what does it really mean?
Essentially, the government wants to make crypto safer
and more secure while leading the
way in terms of innovation.
Basically, let's regulate, but not too much.
Which sounds great in theory, but what does that mean?
Like, does the airport have a good level of security?
I don't know.
They have all kinds of machines that look secure,
but that doesn't stop my edibles from getting through.
The report says 16% of Americans have
purchased digital assets, which is absolutely significant.
But then they go on to say these assets pose,
"meaningful risks to consumers" in a market that's
two thirds smaller than it was just a year ago.
They say sellers of tokens often mislead customers
about expected future returns, and almost 25% of
all coin offerings had disclosure issues.
After reading this, I get the impression that
they're playing catch up and they know it.
But frankly, that's how
financial innovation always works.
We had the bank panic of 1907,
where nearly every bank collapsed,
and afterwards the government was like,
Oh yeah, we should probably fix that.
We had the Great Depression at the end of the
Roaring 20s, and again afterwards, the government was like,
Oh yeah, we should probably fix that too.
This always happens.
A new financial technology springs up, early adopters and
people offering that thing make a ton of money.
Newbies get in everything crashes and the newbies get hurt,
then we get lost to protect everyone
for better or for worse.
and it will take time.
Back to the Great Depression, that started in 1929,
but the Securities Act didn't happen until 1933, four years later.
Now if this is a battle between the government and crypto,
the government absolutely lost round one.
However, to be honest, it's the government's job
to lose round one, but it's also their job
not to overreact in round two.
We're in the most important turning point right now.
Are they going to accept that crypto provides
benefits alongside some risks, letting the technology have
a fighting chance at round two?
Or are they headed back out to
the parking lot, grabbing their shotgun
to end this fight once and for all?
We need to know more about how they see the future.
So let's read on.
They mentioned 7 million unbanked Americans
and 24 million who pay for non bank services
like money orders and check cashing.
If you've ever used one of those services,
you'll know it's a complete racket.
Essentially what they're saying is 2% of the American population is unbanked
and crypto can be extremely useful to a lot of Americans.
This is especially true for people who work in the U.S.
and send money abroad.
Crypto is by far the best way to do this.
Like it can be 50 times cheaper with crypto versus other methods.
In fact, the Fed is actually planning
on rolling out the service called FedNow,
that will help with these kinds of payments
and they say, "digital assets could help facilitate faster payments and make financial services more accessible."
They just need to make sure this
doesn't lead to even more predatory practices.
I interpret this as good news.
They're establishing that crypto is useful and it's
very hard to ban something that you admit to being at least kind of good.
However, that's only praise for technology,
not for existing products.
Just because the tech is good doesn't necessarily mean they
like the idea of Ethereum or Bitcoin,
which we'll get to in a minute, because
first they have a lot to say about society,
a whole lot of words about the environment, human rights and democratic values.
And, you know, don't get me wrong,
I love living on a planet that's not dead.
I like not being locked up and forced to
have one of the country's 15 approved haircuts.
But the corporate speak really gets old.
Sustainability, framework, strategic risks.
I don't know, maybe it's me, but
that kind of stuff just feels like they're checking
PR boxes and they're not saying much.
Talking like a human and being clear
I think would go a long way in these kinds of documents.
It kind of gives you the sense that
they're allowing themselves to just throw the kitchen sink at this
if they want to.
Like, the strategy seems to be say everything you
possibly can say, and then you'll find the answer
somewhere among all the texts later on.
Anyways, back to the doc.
Something they mentioned that will almost certainly happen
is give regulators more power to act,
specifically the SEC and the CFTC.
It seems like the most likely outcome here is
we'll eventually get a specific crypto test.
This test will determine whether a crypto
is a security or a commodity.
If it's a security, the coin would need to
register with the SEC, similar to how stocks work,
and there will be a ton of paperwork and
rules for those security type coins.
If it's not found to be a security,
then we'll likely default as a commodity.
With slightly less rules and regulations.
Bitcoin would fall under the commodity camp.
Essentially, the more a crypto coin feels like
direct ownership in a business, the more likely
that coin is to be considered a security.
I personally feel like this is
kind of a necessary evil.
As much as I don't like regulation for the
sake of regulation, it would greatly decrease the odds
are one of crypto's biggest risks.
I wish that were real.
But going back to the report,
it specifically mentioned the collapse of Terra U.S.D
and the spillover effects of that.
My impression is that stablecoins, like Tether,
are firmly in their sights.
Whether it's right or wrong, people have been pointing
their fingers at stablecoins following recent disasters in the market,
and I can see why. The name suggests
or even promises stability and trust.
So when a stablecoin loses value, people
see a scam and a rug pull.
Look at this guy, Steve.
He found out about Terra U.S.D and put his
life savings in days before the whole thing collapsed.
He lost over $300,000 in the blink of an eye.
So it's easy to see why the
government wants to protect people like Steve.
I mean, I was personally hit by it as well.
And what all of this means
is I smell a digital dollar in the air.
Maybe I'm being overly suspicious here,
but it looks to me like this whole report is set up to say,
look at all these amazing benefits crypto could have.
But, man, these terrible problems keep stopping
us from how wonderful this could be.
If only there was a solution that
could tie this all together neatly.
Boom. A CBDC they control.
This would bring us back to the good old days
before this whole Bitcoin thing shook everything up.
So I went back and read the
whole White house report again,
and I just couldn't shake that digital dollar feeling.
Now, I think CBDCs can be useful,
and I've mentioned in other videos how they've helped people
in places like the Bahamas, and it could be good
as long as it doesn't strangle cryptos.
So my question is, Will these government blockchain bucks run alongside stablecoins?
Or will they be more like, here's your virtual freedom dollar
now stop using those other tokens?
Because if that's the idea, I see a problem.
How can the U.S. become a leader in crypto technology
if we only have a centrally controlled dollar, If there's no competition?
I'm not even sure that's possible to enforce.
Now, there is a passage here
on stablecoins that really interested me.
It says they will explore technical
assistance to developing countries, building out
digital asset infrastructure and services.
And the department of commerce
will help cutting edge U.S. financial technology
and digital asset firms find a foothold
in global markets for their products.
So maybe Americans get their digital dollar,
but American developers get to help other
countries create their own versions.
It's not totally clear.
Either way, crypto is in a serious fight right now.
The big question is what the next steps are
and whether they'll cause the crypto market to topple over like,
Like, yeah, I guess like that.
This report is just a summary of what
agencies think so far, and by looking closely,
we can see they're particularly interested in a
few key areas: securities laws and stablecoins.
That's where we'll see regulation first.
But I do get the feeling that
these regulations are still a ways away.
The terms they use are far too general.
I am glad to see their conscious of
not slowing down innovation, and it's my hope
that they actually act on that.
But hey, if the government does go
overboard, regulates too harshly, it's still crypto.
There will be a way to buy it. Now, from here,
if you've been wondering what big crypto companies have been up to,
I highly recommend this video on screen.