A crackdown by the United States against cryptocurrencies and companies will only serve to stifle cryptocurrency-related innovation and “undermine” the country, industry insiders said in the wake of Coinbase’s recent notice from Wells.
On March 22, cryptocurrency exchange Coinbase became the latest cryptocurrency firm to receive a “legal threat,” in the form of a notice from Wells, just a month after stablecoin issuer Paxos received its own. in February. Some suggest there could be more to come.
Mati Greenspan, head of cryptocurrency research firm Quantum Economics, said he believes US regulators have not been crypto-friendly “from the start.”
The recent collapses of crypto-friendly banks and startups, including Silvergate, Silicon Valley Bank (SVB) and Signature Bank, have been seen by some as part of a plan by regulators to debank the cryptocurrency sector, dubbed ” Operation Choke Point 2.0″. .”
Meanwhile, a March 20 White House economic report turned into a scathing review of the merits of crypto assets, devoting nearly an entire chapter debunking their “touted” benefits.
Greenspan told Cointelegraph that the rumored action could be underway as cryptocurrencies are seen as a “threat” to the dominance of the US dollar in global trade, a significant and long-lasting benefit for the US.
Russia, China and now crypto. Slowly but surely, the United States is isolating itself from the global economy. The USD cannot remain the world’s reserve currency for much longer under these conditions.
—Mati Greenspan (@MatiGreenspan) March 14, 2023
However, as more people start using cryptocurrency for cross-border remittances globally, he warned that a crackdown on cryptocurrency in the US could have the opposite effect on the dollar:
“The surgical removal of cryptocurrencies from the US banking system will only further isolate the United States and weaken the dollar’s position as the world’s reserve currency.”
Adrian Przelozny, chief executive of crypto exchange Independent Reserve, told Cointelegraph that the banking sector’s recent woes were not due to “any failure in crypto,” but rather because banks were managing their risks in an “irresponsible way.”
“The White House would be better served by reviewing practices in the banking industry,” he added.
Speaking about the latest action against Coinbase, Przelozny said that the “adverse environment for the crypto industry” in the US will drive related “jobs, investment and future innovation” abroad.
“Singapore, Hong Kong and potentially Australia,” which are seeing the benefits of the industry, may prove to be a better home for it, and those countries “will reap the economic benefits,” Przelozny said.
Related: The banks and the Federal Reserve have a problem: what about cryptocurrencies?
The exact reasons why the regulator is targeting Coinbase are still unclear. The SEC has declined to comment on the matter.
Investments in crypto asset securities can be exceptionally volatile and speculative, and the platforms on which investors buy, sell, borrow/lend these securities may lack important investor protections.
@SEC_Investor_Ed investors: beware of crypto asset values.— US Securities and Exchange Commission (@SECGov) March 23, 2023
Michael Bacina, a lawyer and partner at Piper Alderman, agreed that a “regulation-by-compliance model” will “drive crypto asset innovation abroad,” adding:
“This is a strange position to take given the losses many faced in the last 12 months due to collapses involving unregulated offshore structures.”
Bacina said that for years the industry has asked for clarity on how to comply. She pointed to recent “revealing” comments made by the judge in the Voyager Digital bankruptcy case who “noted that there is no clear guidance from regulators.”
He added that until governments set the path to regulatory compliance, offshore jurisdictions will continue to host crypto companies “which will cost jobs and increase risk for consumers and investors.”
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