Fighting Back Against Rogue Regulators

The Breakdown


All right, Friends, well, today we are really picking up on the theme of 2023 so far, which is as it turns out not just fallout from FTX, but specifically, the emergence of a dramatic regulatory battle around crypto in the United States. I think many of us felt that this was inevitable coming off of the events of last year, but it is playing out in very specific ways, which I think demands specific responses. We're going to read one essay in a couple of threads today, and we start with a piece by Michael Casey from coin desk called regulating crypto by enforcement and stealth will set the U.S. back. Michael writes, call me naive, but I've always resisted the conspiracy theory that the anti crypto stance adopted by certain U.S. regulators is meant to strangle this industry and protect the financial establishment it seeks to disrupt. I've preferred to see it as a wrong headed but well intended effort to protect consumers. Recent events have me wondering if something more sinister isn't afoot, and that maybe I am naive. First, all indications are that the securities and exchange commission will outright prohibit companies from providing staking services to retail customers in the U.S. products that give investors an opportunity to share and the token rewards that proof of stake blockchains delivered a validators. Following a hint from coinbase CEO Brian Armstrong, that's such a band was coming, news broke that in response to an SEC lawsuit, coinbase competitor kraken is indefinitely abandoning the staking service it offered to U.S. customers and paying a $30 million fine. Second, per observations from castle island ventures general partner Nick Carter and blockchain association chief policy officer Jake stravinsky, and evident in other signs such as binance's problems with U.S. dollar bank transactions, it seems regulators are pushing U.S. banks to stop surfacing crypto companies. These latest moves will make it even harder for average U.S. citizens to participate in this industry. Limiting it to large institutional investors, while various innovative startups look to disrupt those same rent seeking intermediaries will struggle to access liquidity. It's hard to understand how these actions serve to protect consumers or further other policy objectives such as expanding financial inclusion. It feels as if government agents are deliberately trying to force this industry into the hands of Wall Street fat cats.

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