New government report out on crypto, asking for more regulations?
A new US Government report is calling cryptocurrency "a potential risk to the stability of the U.S. financial system". And they are, of course, calling for more regulations *sigh*. The universal fix-all. Except sometimes where the lobby manages to deregulate things. Were you get awesome results like the 2008 house crash.
The report
This time it is The Financial Stability Oversight Council that is weighing in and having a go at crypto. The report is a whopping 124 pages, meaning it will surely be able to put you to sleep for most nights of the week.
There are some things the report highlights:
- "Acutely amplified instability within the crypto-asset ecosystem," including a lack of risk controls to protect against run risk or excessive leverage.
- Prices driven by speculation rather than fundamental economic use cases
- Repeated significant and broad declines.
- Crypto tokens associated with entities with "risky business profiles and opaque capital and liquidity positions."
The strange thing is that they are not really anything strange. Well, the 3ed point is a bit redundant in my opinion, as it basically could be used to describe any market, like the stock market as an example.
This leaves me in a pretty strange situation. I was prepared to offer some counterarguments to whatever strange arguments were being prevented in the report. But unlike the White House comprehensive plan to kill crypto, or whatever they were calling it. This one actually looks alright.
This market isn't so decentralized, ... Now, we see this industry populated by large, concentrated intermediaries, which often are an amalgam of services that typically are separated from each other in the rest of the securities markets.
Securities and Exchange Commission, SEC, Chair Gary Gensler had that to say regarding the report. And yet again I fear he has a point. Most of the crypto market is centralized around a few big actors. And yes, they tend to offer a ton of services. If they offer things you normally would not find in the "same place". That I have to take his word for.
But what is alarming is the very promise of decentralization appears to slowly be crumbling right before our eyes. And it might be the very thing that will let the wolf into the sheep pen. Aka give regulators the very thing they need.
Sadly I think that once the wolf is in. It will not stop until all the sheep are dead. Simply because the sheep represent a three. A threat to the power that the one who controls the financial system holds. And this power will not be given up freely. As the saying goes "absolute power corrupts absolutely".
What is your thought on this whole thing? Are you for or against the regulation of crypto? Do you think there is a happy middle ground? Do you think crypto stands a fighting chance to compete with the current financial systems? Please sound off in the comment section down below. If you would like to support me and the content I make, please consider following me, reading my other posts, or why not do both instead.
See you on the interwebs!
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Resources
- https://decrypt.co/111178/u-s-regulators-report-calls-for-more-authority-over-crypto
- https://home.treasury.gov/system/files/261/FSOC-Digital-Assets-Report-2022.pdf
- https://www.whitehouse.gov/briefing-room/statements-releases/2022/09/16/fact-sheet-white-house-releases-first-ever-comprehensive-framework-for-responsible-development-of-digital-assets/