February 1, 2023

Does the state prefer classic cryptocurrency?

Does the state prefer classic cryptocurrency?

If the years 2017-2018 were marked by a “paradelegalizations ”of cryptocurrencies in different countries, and it seemed that the adoption of a new economy was a settled issue, then 2019 brought a radically new trend. Instead of totally fighting or allowing crypto assets, governments (primarily American) preferred to divide them into “convenient” and “inconvenient”.

Paradigm shift

Significant events have occurred in the cryptocurrency market in recent days, which can have serious consequences for the entire industry: CTFC attack on the principle of emission of PoS, new the triumphs of Bitkt futures on Bakkt and Facebook's attempt to create a payment system that fits into the traditional financial paradigm.

When in July, American politicians defeatedFacebook’s Libra project, but gave the green light to Bakkt’s supplying bitcoin futures platform, it seemed strange to many. One would think that there is no consensus among politicians regarding cryptocurrencies, or that Bakkt, unlike Libra, does not have a great chance of success. But further events revealed the possible attitude of governments towards cryptocurrencies.

Beginning of the hit list: corporate and stable currencies

July-October showed that particular intolerancepoliticians show two categories of currencies: corporate and stable (stable coins). The defeat of Libra, an attempt to declare XRP a security, Tether (USDT) is in big trouble, and the suspension of the TON project looks like links in a single chain.

All these projects are tied to specific companies. Of these, two already launched - XRP and USDT - in several years won 3 and 4 places in the capitalization rating, far ahead of their decentralized competitors XLM, DAI, etc. Despite the popularity of the idea of ​​decentralization, the experience of XRP and USDT showed that there was a single management center can play a huge role in the promotion of the project. However, this is precisely what makes the project vulnerable to government prosecution.

Libra and USDT, however, are stablecryptocurrencies. They, unlike the volatile classical digital currency such as Bitcoin (BTC), can now seriously compete with leading national currencies such as the dollar, as they are convenient as a means of payment. The fear of politicians before non-state stablecoins turned out to be such that it provoked a collective critical statement by the participants of the G7 summit. And in October, a group of German bankers called on European politicians to join forces in creating a state digital euro to get ahead of the emergence of non-government stablecoins like Libra.

A new statement also fits into this trend.Facebook, November 12: The company intends to launch a more modest version of its Facebook Pay system this month. The FB administration emphasizes: FB Pay is by no means Libra, it is a "simple" payment system. And at first it will act only in the United States. By 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 hand, it gives the authorities a sign that it intends to comply with unspoken rules and not try to "jump higher" payment systems like PayPal

Does the state prefer classic cryptocurrency?

Prospects for replenishment of the hit list with PoS currencies

November 13, head of the American Committee on Urgentexchange trading (CTFC) Heath Tarbert said PoS currencies can now be regarded as securities. Recall that the XRP token (which is not a cryptocurrency, but rather resembles a Ripple share) this year, the court already proposed to recognize as a security, which would greatly complicate its distribution and actually exclude it from the cryptocurrency market. XRP withstood the blow, but in October the Securities and Exchange Commission (SEC) for a similar reason banned the spread of the Gram currency of the TON project. Now, similar problems can appear in all PoS currencies - both existing and projected.

Was there a political order or just following the letterof the 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 transition to PoS. This can have big consequences not only for coin rates, but also for the development of the entire industry.

One possible explanation for the attack on the PoS principle is its competition with bank deposits (more privacy and convenience). So, again, a threat to the old financial system.

Is classic cryptocurrency on the list of trustworthy?

Perhaps a consensus has matured among politicians: if the fight against all virtual currencies is too complicated and unpopular, then you can give up the usual volatile blockchains to crypto enthusiasts, but strictly prevent the emergence of new and potentially more dangerous ones. An excellent example of the calm attitude of the state towards classic crypto assets is the Bakkt platform. She not only received SEC approval in July, but she is becoming increasingly successful before our very eyes.

Initially, when Bakkt daily trading volumesin the hundreds of thousands of dollars, many talked about the failure of the project. But in October it became clear: large investors were just waiting for a convenient moment to enter the market. October 23, after another failure of the BTC rate below $ 8000, the daily trading volume reached $ 5 million, October 25 - $ 10 million, November 8 - $ 15 million. And these are not the only exceptions: for example, on November 11-12, daily volumes amounted to 13- 14 million. From September to November, the typical Bakkt trading volumes grew by 2 orders of magnitude, and not the fact that this is the limit. A significant part of investors is 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.