December 2, 2023

Does the state prefer classic cryptocurrency?

Does the state prefer classic cryptocurrency?

If 2017-2018 was marked by a “paradelegalizations" cryptocurrencies in different countries, and it seemed that the adoption of the new economy – The issue has been resolved, then 2019 brought a radically new trend. Instead of completely fighting or allowing crypto-assets, governments (primarily the American one) preferred to divide them into “convenient” ones. and “inconvenient”.

Paradigm change

In recent days, significant events have occurred in the cryptocurrency market that could have serious consequences for the entire industry: the CTFC attack on the principle of PoS emission, newthe triumphs of Bitcoin futures on Bakkt and Facebook's attempt to create a payment system that would fit into the traditional financial paradigm.  

When American politicians crushedFacebook's Libra project, but they gave the green light to the Bitcoin futures delivery platform Bakkt, which seemed strange to many. One might think that there is no consensus among politicians regarding cryptocurrencies, or that Bakkt, unlike Libra, does not have a great chance of success. But subsequent events revealed the possible attitude of governments towards cryptocurrencies. 

Beginning of the hit list: corporate and stable currencies

July-October showed that particular intolerancePoliticians are interested in two categories of currencies: corporate and stable coins. The defeat of Libra, the attempt to declare XRP a security, big troubles for Tether (USDT), the suspension of the TON project look like links in one chain. 

All these projects are tied to specific companies.Of these, two have already been launched – XRP and USDT – Over the course of several years, they won 3rd and 4th places in the capitalization ranking, far ahead of their decentralized competitors XLM, DAI, etc. Despite the popularity of the idea of ​​decentralization, the experience of XRP and USDT has shown that the presence of a single leadership center can play a colossal role in the promotion of the project. However, this is precisely what makes the project vulnerable to government prosecution. 

Libra and USDT, at the same time, are stablecryptocurrencies. It is they, in contrast to the volatile classical digital currency such as Bitcoin (BTC), that can now seriously compete with leading national currencies such as the dollar, since they are convenient as a means of payment. Politicians' fear of non-state stablecoins was such that it provoked a collective critical statement from the G7 summit participants. And in October, a group of German bankers called on European politicians to join forces in creating a state-owned digital euro to forestall the emergence of non-state stablecoins like Libra. 

The new statement fits into this trendFacebook November 12: The company intends to launch a more modest version of its Facebook Pay payment system this month. The FB administration emphasizes: FB Pay – This is by no means Libra, it is “simple” payment system. And at first it will only be valid in the United States. With this measure, FB kills two birds with one stone: on the one hand, it shows users that it does not refuse to create a payment system, on the other – gives the authorities a sign that she intends to follow the unspoken rules and not try to “jump higher” payment systems such as PayPal

Does the state prefer classic cryptocurrency?

Prospects for adding PoS currencies to the hit list

On November 13, the head of the American Emergency CommitteeExchange Trading Facility (CTFC) Heath Tarbert said that PoS currencies can now be regarded as securities. Let us recall that the XRP token (which is not a cryptocurrency, but rather resembles a Ripple share) was already proposed in court this year to be recognized as a security, which would greatly complicate its distribution and actually exclude it from the crypto market. XRP survived the blow, but in October the Securities and Exchange Commission (SEC) banned the distribution of the TON project's Gram currency for a similar reason. Now similar problems may appear in all PoS currencies – both existing and projected. 

Was there a political order here or just following the letter?law, but the American authorities, in fact, intervened in the competition of coins and approaches to their issue. For example, they supported ETH against EOS, but warned its own developers against a possible future move to PoS. This could have big consequences not only for coin prices, but also for the development of the entire industry. 

One of the possible explanations for the attack on the PoS principle – its competition with bank deposits (more privacy and convenience). This means, again, a threat to the old financial system. 

Classic cryptocurrency on the list of trustworthy ones? 

Perhaps there is a consensus among politicians:if the fight against all virtual currencies is too difficult and unpopular, then the usual volatile blockchains can be left to crypto enthusiasts, but the emergence of new and potentially more dangerous ones can be strictly suppressed. An excellent example of the state’s calm attitude towards classic crypto-assets – Bakkt platform. Not only did it receive SEC approval in July, but we can see it becoming more and more successful. 

Initially, when Bakkt's daily trading volumesamounted to hundreds of thousands of dollars, many started talking about the failure of the project. But in October it became clear: large investors were only waiting for the right moment to enter the market. On October 23, after another failure of the BTC rate below $8,000, the daily trading volume reached $5 million, on October 25 – $10 million, November 8 – $15 million. And these are not isolated exceptions: for example, on November 11-12, daily volumes amounted to 13-14 million. From September to November, typical Bakkt trading volumes increased by 2 orders of magnitude, and it is not a fact that this is the limit. A significant part of investors are already ready to enter the market, without waiting for collapses and, probably, seriously expecting its growth.  

However, despite the active transfer of fundsmajor investors in BTC, there is no panic from governments. According to Heath Tarbert, classic cryptocurrencies resemble commodities like gold. Perhaps this type of digital asset is acceptable to states today.