Legal Crypto Battles in the U.S.
June and early July where rich in events related to the cryptocurrency market. The high bar was set by the US regulator SEC, which sued the two largest cryptocurrency exchanges, Binance and CoinBase. The accusations were standard including illegal trading in securities. Actually, the head of the SEC, Gary Gensler, has never hidden his principled position: “all cryptocurrencies are securities.” The official made the only exception for bitcoin, although, it seems, that is a subject to change at any time. If Binance made certain concessions, then CoinBase decided to fight to the end and rejected all accusations. We are going to have a court show, which the entire crypto community would be happy to watch. The next step was taken by BlackRock, the largest investment fund managing about $9 trillion, filed an application to the SEC for issuing a bitcoin ETF. Following it, the same applications were submitted by a whole pool of companies wishing to connect to a promising business. It certainly came out of the blue, since “traditional” investment funds were quite skeptical about cryptocurrencies.
“Bitcoin just shows you how big the demand for money laundering is in the world…”
Larry Fink, CEO of BlackRock, 2017
However, there is nothing more changeable than beliefs of a financier. And now BlackRock is leading the movement for bitcoin ETFs. The market has immediately rose following a wave of optimism, and the exchanges began to calculate future profits from trading of the new instrument. Unfortunately, the happiness was short-lived. The SEC, in its the traditional manner, told applicants that their applications are inadequate, and they are far from ETFs. The market instantly responded with a rapid fall, and experts began to draw gloomy images of the future. However, this is not the end. The “ETF team” have quickly corrected the applications and sent them back to the SEC. Now the regulator will have to seriously think about further actions, especially given the possible future lawsuits. Pretty hard to explain, as usual, their refusal arguing that “risk of market manipulations”. Otherwise, it will look like as obvious political engagement.
Hot Crypto Asia
Something interesting is going on in Asia, on the other side of the world. First, HSBC Bank announced the plan to turn Hong Kong into a global cryptocurrency hub. The crypto community has enthusiastically embraced this statement, since in China such plans are possible only with the full approval by state. Has China decided to turn sharply to crypto? This is difficult to say, because at the same time as the HSBC statement, the top management of the People’s Bank of China (PBC) received a die-hard crypto-skeptic Pan Gongshan. Once he even altered the saying of Confucius in relation to bitcoin.
“If you sit by the river and watch, one day the corpse of bitcoin will float in front of you…”
Pang Gongshan NBK Top Manager, 2018
The personal opinion of the financier is likely to remain unchanged, but the policy of the China state may change, and then his opinion will no longer matter. However, the statement of HSBC and the appointment of Pan Gongshan may not contradict each other, if we assume that the bank considers the digital yuan and its derivatives as cryptocurrency. Taking into account the slowness of China, it can be assumed that the real picture won’t become clear until autumn.
Cryptocurrencies: what’s next?
The cryptocurrency market is sensitive to information interventions, so the bitcoin rate was volatile. However, the main problem is not at all the rise or fall of the cryptocurrency rate, but fundamental decisions that can determine the future of the crypto industry for years to come.
“The cryptocurrency market is highly politicized. We pay attention to the statements of individual structures or representatives of the state, but all this is only the visible part of the iceberg. Now there is a struggle of deep political groups, acting respectively for and against the formal and official recognition of cryptocurrencies. In fact, there is a struggle for the future of the global financial system …“
Lado Okhotnikov, Founder & CEO, Meta Force
Indeed, what the crypto market expects in the case of adverse developments namely the defeat in the courts of Binance and CoinBase and the refusal to allow bitcoin ETFs? From the point of view of market development, nothing positive should be expected. Negative dynamics of exchange rates is almost inevitable. Does this mean that cryptocurrencies are coming to an end? No, it’s not. Firstly, we expect minting a whole pool of state cryptocurrencies, and this is a separate and very large market. Secondly, we are used to thinking about cryptocurrencies as ordinary finance, but their functionality is much higher. Blockchain technology allows the development of a wide variety of applications. For example, mentioned Lado Okhotnikov has proposed the concept of Meta Force – a platform that is practically independent of political trends. So, life will go on in any case. Since we are not able to influence politics, we have to wait for the verdict. I am glad that we’ll not have to wait long.
