Crypto has become the ultimate active marsh

Over the past six months, Crypto has played a new role at the center of American public life. Several firm officials have significant investments in digital assets. Crypto lovers help manage regulatory agencies. The largest companies in the industry are among the largest donors of electoral campaigns, exchanges and issuers deployment of hundreds of millions to defend friendly legislators and to crush their opponents. The President’s sons praise their cryptographic companies in the world. Mr. Trump’s biggest investors can dine with the president. The assets of the first family are now worth billions, making crypto, perhaps the greatest source of its richness.

It is ironic, given the origins of Crypto. When Bitcoin started in 2009, a utopian and anti-authoritarian movement welcomed it. The first Crypto adopters had noble objectives concerning the finance revolution and the defense of individuals against expropriation and inflation. They wanted to give energy to small investors, who would otherwise be at the mercy of giant financial institutions. It was more than an asset: it was technology as a liberation.

All this is forgotten now. Crypto has not only facilitated fraud, money laundering and other flavors of financial crimes on the gargantuan scale. The industry has also developed a dirty relationship with the executive power of the American government which exceeds that of Wall Street or any other industry. Crypto has become the ultimate active marsh.

The contrast with what is happening outside America is striking. Jurisdictions as varied as the European Union, Japan, Singapore, Switzerland and the United Arab Emirates have succeeded in giving new regulatory clarity in recent years. They did it without the same conflicts of creeping interests. In certain parts of the world in development, where the expropriation by governments is plagued by inflation is the highest and the discharge of currencies is a real risk, the crypto always fulfills something like the role that the first idealists in the past.

All this occurs while the underlying technology of digital assets takes on its full meaning. There is still a lot of speculation. But crypto is slowly taken more seriously by financial companies and traditional technological companies. The amount of active assets, including private credit, bonds and raw materials from the US Treasury, which have been “tokenized” to be exchanged on a blockchain have almost tripled in the last 18 months. Vanilla’s financial institutions like Blackrock and Franklin Templeton are major tokenized monetary market transmitters. Cryptographic companies have been involved, offering tokens fixed to assets such as gold.

The most promising use may be payment companies. Some embrace stablescoins (digital tokens supported by other more conventional assets). During the last month, Mastercard said it will allow customers and merchants to pay and set stable transactions. Stripe, a fintech company, launched Stablecoin financial accounts in 101 countries. Stripe also bought Bridge, a Stablecoin platform this year. Three years after deleting her Diem project, Meta can again plunge her toe into the water.

This is an opportunity that cryptographic companies are likely to breathe. Boosters argue that they had no other alternative than to fight Dirty in America when Joe Biden was in the White House. Under the management of Gary Gensler, the Securities and Exchange Commission adopted a low vision of the sector, has set up many of its most eminent companies in matters of application measures and legal affairs. Banks were afraid to offer services to cryptographic companies and buffer in crypto, especially with stablecoins. In this sense, industry has a point. The clarification of the legal status of the crypto before the courts, rather than by the congress, was neither particularly effective nor always fair. The regulatory pendulum has now swung hard in the opposite direction, and most cases against cryptographic companies have been abandoned.

The result is that the crypto must be saved from itself in America. New rules are still necessary to ensure that risks are not injected into the financial system. If politicians, frightened by the electoral power of the industry, do not properly regulate cryptography, the long -term consequences will be harmful. The danger of putting too little railing is not only theoretical. Three of the largest banks collapsed in 2023, Silvergate, Signature and Silicon Valley Bank, all had large exhibitions to flying deposits in cryptographic industry. Stablecoins can be vulnerable to races and must be regulated as banks.

Without such changes, the main lights of Crypto Land will regret good deals in Washington. The industry is largely silent about conflicts of flowery interest generated by cryptographic investments of the Trump family. Legislation is necessary to clarify the status of industry and assets, to give regulatory security that the most sensitive cryptographic companies have been hoped for a long time. The mixture of the President and Government’s business interests are already making this more difficult. A bill on cryptography in the Senate did not progress on a procedural vote on May 8 after many Democratic senators withdrew their support, as well as three Republicans.

Me, me, even

No industry that becomes associated with a party can be immune to mood swings of the American electorate. By welcoming Mr. Trump as a Savior and becoming the active of the favorite marshes, the industry chose one side. Crypto has a new role in the policies development table. But the reputation and the fate of industry are now linked to the ups and downs of its political benefactor. The crypto was good for the trumps. But in the end, the advantages of this agreement will only circulate one way.

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