US Treasury Department Fires a Rocket on Cryptocurrencies; China bans them again

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• Regierungen mögen Blockchain lieben, aber sie hassen Kryptos
• Sanktionen für einen Austausch: Beihilfe zu Cyberangriffen
• Ein Nebelschleier zum Schutz der Kontrolle – China verbietet die Anlageklasse erneut
• Die SEC hat eine Rakete auf Coinbase abgefeuert
• Weitere regulatorische Angriffe, die darauf abzielen, das Biest zu töten, das den Status quo bedroht

Cryptocurrencies are becoming mainstream assets. More and more companies are accepting them as payment, financial institutions have started allowing a certain percentage of digital currencies for portfolio allocation, and a Central American government is leading cryptocurrency as a national currency.

Proponents claim the crypto revolution is the evolution of fintech. Opponents say digital currencies have no intrinsic value and are most useful to those who want to break rules, regulations and laws. Warren Buffett has called and equated cryptocurrencies “a worthless deception", "Financial rat poison squared,and said that she “basically have no value.”

His partner Charlie Munger went even further, saying Bitcoin and other cryptos are “disgusting and against the interests of civilization.”

Conversely, Jack Dorsey, co-founder of Twitter (NYSE:) and CEO of Square (NYSE:), called it the currency of the Internet. In a wryly funny comment, Tesla's (NASDAQ:) Elon Musk revealed his feelings towards cryptos when he said:

“I could pump, but I'm not dumping the assets.”

While support or opposition to cryptocurrencies can be generational, the conflict goes beyond the high-profile comments supporting or opposing the asset class.

Controlling the money supply is a core element of state power. The ideology of the cryptocurrency asset class is libertarian and contradicts the financial status quo. Cryptos return control from governments to a collective marketplace made up of individuals. If cryptos replaced fiat currencies, governments would not be able to expand or contract the money supply to expand or contract growth, an essential tool of power and control.

We have seen the government and regulators fire some rockets at the asset class in recent weeks. This could be just a start to preventing the asset class from growing beyond its current $2 trillion market cap.

Governments may love blockchain, but they hate crypto

Blockchain technology is almost unanimously supported because fintech offers speed and efficiency in processing transactions. Blockchain is either the child of Bitcoin or vice versa, which is the chicken-and-egg dilemma of the cryptocurrency asset class.

Many well-meaning systems and companies can have controversial or even evil consequences. The pharmaceutical industry saves lives, but abuse and drug addiction have also cost lives.

Governments have embraced blockchain technology, but cryptocurrencies are a different story.

One of the roots of political power lies in control of the purse strings. The ability to expand and contract the money supply is a critical function of government. The current stimulus that has stabilized the US and global economies during the global pandemic is a perfect example.

Cryptocurrencies are libertarian assets because they take away governments' control over the money supply. The value of a cryptocurrency is a function of the bids and offers in the market at any given time.

Most cryptos have fixed supplies. They fly under the radar of governments, monetary authorities and central banks. The rise of the cryptocurrency asset class is a direct ideological challenge to government control and power. Therefore, while governments can support blockchain, cryptos are a completely different story.

Sanctions for an exchange: aiding and abetting cyberattacks

When El Salvador adopted Bitcoin as its national currency in early September, alarm bells likely went off in the halls of power worldwide. Last week, the US Treasury Department sanctioned a cryptocurrency exchange for its role in laundering cyberattack ransoms.

The Treasury Department claims that the “Suex” exchange facilitated transactions with illicit proceeds from at least eight ransomware variants. “We will likely see government lawyers use”Know your customer“Rules and regulations to sanction exchanges.

As many opponents point out, cryptos are the perfect currencies for nefarious and criminal enterprises. Charlie Munger called her “disgusting."While the Treasury Department pursued an exchange because of logical abuses, the ideological reason for roadblocks is also compelling.

A smokescreen to protect control – China is banning the asset class again

I see the increasing number of regulatory actions against the cryptocurrency asset class as a coordinated attempt to preserve the status quo. It's easier to put a regulatory leash on cryptos before overall market capitalization - and adoption as a mainstream medium of exchange - grows. The escalating number of sanctions and regulatory measures is nothing more than a smokescreen to maintain the status quo. As digital currencies dominate markets in the coming years, governments will ensure that they dominate the cryptocurrencies available for trading and investment.

The bottom line is that the US, Europe and all other governments will do everything they can to maintain control over the money supply. Hedge fund manager Ray Dalio recently said: If Bitcoin becomes truly successful, regulators will “kill it.”

On September 24, in another government move against the asset class, the government declared all cryptocurrency transactions illegal.

The SEC fired a rocket at Coinbase

The latest move by the US Treasury Department is the second regulatory rocket in recent weeks. The SEC has sent a notice to US crypto exchange Coinbase Global (NASDAQ:) that it intends to initiate an enforcement action to prevent the launch of COIN.Lend” Product that allows customers to lend crypto tokens for a fee or return.

The SEC argues that “Lend" securitizes cryptos, placing them under the agency's regulatory umbrella. COIN canceled its plans for the product after receiving the notice.

Gary Gensler is the SEC chairman. As head of the CFTC, he allowed contracts to be traded on the CME. During his time off from U.S. regulators, Chairman Gensler taught a fintech course at MIT. Many cryptocurrency market participants believed he would support the asset class in the SEC.

Last week, the SEC chairman said he did not see the long-term viability of cryptocurrencies, comparing it to the wild banking era in the United States that ran from 1837 to 1863 without federal banking regulation.

More regulatory attacks aimed at killing the beast and threatening the status quo

El Salvador is a maverick adopting crypto as its national currency. China has since made it illegal, with severe penalties for those who defy the law.

The US uses the Treasury Department, the SEC and other regulators to “protect"investors and businesses, but the goal is to protect the government's control over the money supply.

I expect the number of regulatory actions and anti-crypto declarations to increase with the market cap of the asset class. Ray Dalio said it best as governments can”kill” Bitcoin and the other cryptocurrencies.

The number of regulatory rockets will likely continue to rise. The problem is ideology that runs counter to the status quo and government power. When fully regulated, cryptos will no longer hand the power of monetary control back to individuals, which is the attraction for many supporters.