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In the last few days a lot of newslets reported intensively on how the USA, above all the US securities regulator SEC, is taking action against the crypto sector. American companies and banks related to the crypto economy tremble at possible penalties and bans from the US authorities. Over-regulation is therefore also a stress factor for prices of cryptocurrencies. If Binance, Coinbase, Kraken and Co. come under pressure and are not allowed to offer staking or issue stablecoins, for example, then that is bad for the crypto market.
Cryptocurrencies taken seriously
As negative as the situation may be at the moment, it shows that states and authorities have understood that the crypto sector is here to stay. This realization leads to sometimes blind activism, as can be seen in the SEC’s hasty actions.
Mahatma Gandhi’s quote, often quoted in the crypto sector, is truer than ever these days: “First they ignore you, then they laugh at you, then they fight you and then you win.”
Laughter has now turned into fighting. But it should be clear that preventing it is no longer possible. Even crypto-critical politicians and officials should be aware of this. Accordingly, it is currently only a matter of tightening the reins as quickly and as hard as possible.
Crypto weakness is exploited by politicians
SEC boss Gary Gensler is very knowledgeable about crypto-matter. This is exactly why he is using the current weakness in the crypto sector to set guard rails as quickly as possible – the timing is perfect. It’s a race for interpretation. Gensler and other public officials know they must move fast before the next crypto wave reignites new momentum.
One is preparing for that very wave now and trying to do a clean sweep while it is still possible. It would be a disaster for Gensler and Co. if the DeFi sector and new crypto companies took over the existing financial and service sector in a very short time. The loss of control would be difficult to cope with. Consequently, attempts are being made to take the wind out of the sails of the sector as much as possible. However, there is no need to be afraid of crypto bans in the USA.
US fears systemic risk
Also revealing is the constant emphasis by the US Securities and Exchange Commission, the US Federal Reserve and the US Treasury that they want to avoid systemic risk at all costs. In short: there is a fear that the next financial crisis will be triggered by the crypto sector, which will infect the traditional financial sector. So far, however, this systemic risk has not existed at all. The sector was far too small and isolated to cause any systemically relevant harm.
The bullish argument can also be derived from this line of argument that the actors mentioned very well assume that the sector will grow strongly in the future and thus also become systemically important. Accordingly, a targeted division between cryptocurrencies and the traditional financial sector is taking place. Apparently, one does not feel that the association has gone far enough, for example with regard to insufficient legislation.
Blackrock and JP Morgan handle it
Also, and this would be a daring thesis, one can develop the idea that large American banks have an interest in the Web3 financial sector being slowed down. The extent to which this lobby influence comes about is of course pure speculation.
In any case, the Wall Street players who are in the process of building their own token infrastructures have a motive. They certainly don’t mind a little more time to build their own and buy crypto companies.
For crypto enthusiasts who are getting scared of a total cryptocurrencies shutdown in the US, it should give some peace of mind that Blackrock, Fidelity, JP Morgan, Bank of America, and Goldman Sachs have all made numerous crypto investments and projects. One can assume that these were not just ill-considered gut decisions.
The action against the crypto sector is to be interpreted as accolade. As painful as it is at the moment and pushing prices south, it is a very bullish sign in the long term.