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The Almighty Buck Bitcoin Government

US Officials are Discussing How to Regulate Cryptocurrencies and Stablecoins (reuters.com) 57

Posted by EditorDavid from the internet-money dept.
America's Securities and Exchanges Commission received a letter Thursday from Colorado Senator John Hickenlooper urging clearer regulations of digital assets: The lawmaker asked the agency to clarify what types of digital assets are securities, address how to issue and list digital securities, establish a registration service for digital asset security trading platforms, set regulations on how trading and custody of digital assets should be carried out, and determine what disclosures are required for potential investors to be informed about. "Given the complexity of these issues, and recognizing that some digital assets are securities, others may be commodities, and others may be subject to a completely different regulatory regime, a formal regulatory process is needed now," Hickenlooper wrote in his letter.

"This will significantly improve policy development and allow the SEC to collect views and understand concerns. Furthermore, it will create clear rules that will benefit investors who currently may not be fully aware of the risks associated with digital asset investments...."

Hickenlooper also wrote that applying old market regulations to cryptocurrency would lead to financial services being more expensive and less accessible; leading to the agency's disclosure regime being less useful to U.S. residents. "I recognize these questions are complicated, but it is time for the SEC to engage. Empowering innovators, fostering financial innovation, protecting investors, and ensuring market integrity are consistent principles," the lawmaker concluded in his letter. "I look forward to working with you to build prudent rules as this powerful technology continues to develop."
Meanwhile, the Securities and Exchange Commission wants some changes of its own, reports Reuters: The U.S. Congress should give the Commodity Futures Trading Commission more powers to police cryptocurrency stablecoins to reduce risks to the financial system, Securities and Exchange Commission Chair Gary Gensler said on Friday.... With around $150 billion in market capitalization, stablecoins have many similarities to money market funds, and need to be regulated accordingly, Gensler said at a conference held by Georgetown University's Psaros Center for Financial Markets and Policy in Washington.... "I think the CFTC could have greater authorities. They currently do not have direct regulatory authorities over the underlying non-security tokens," he said....

The Financial Stability Oversight Council, a U.S. regulatory panel comprising top financial regulators, earlier this month recommended that Congress pass legislation addressing the risks digital assets pose to the financial system, including bills to bolster oversight of crypto spot markets and stablecoins. It remains unclear when Congress might pass crypto-related legislation, although several bills have been introduced to address stablecoins and digital commodities regulation.
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US Officials are Discussing How to Regulate Cryptocurrencies and Stablecoins More

US Officials are Discussing How to Regulate Cryptocurrencies and Stablecoins

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  • All of this money printing by the central banksters WILL have consequences. No matter how much they try to control and nay-say on alternatives, those consequences will be catastrophic.
  • If US regulators regulate cryptocurrencies that they can effectively control into oblivion, other cryptocurrencies more effectively decentralized and globalized will just emerge and take over.

    If on the other hand US regulators act with appropriate rationality and humility considering the US's position as a part of the human society and economy, today's cryptocurrencies and infrastucture may just try to slightly adapt tot the US laws.

    • That's the exact opposite of what we've seen (Score:5, Interesting)

      by rsilvergun ( 571051 ) on Sunday October 16, 2022 @01:08PM (#62971505)
      Cryptocurrency has centralized around a handful of exchanges and mining pools. Or in the case of ethereum whoever puts up the most money as a stake.

      For mined currencies the exchanges along with the mining pools can and will do 51% attacks. The mining pools have the hash rate to do it and the exchanges can force them to by threatening to block them from the exchanges where they can reliably sell their mined crypto.

      For proof of stake the only viable currency is ethereum and it has a central authority that has shown that they can fork the chain anytime they want and because they are the ones with all the liquidity and currency everyone's going to follow their fork. Go look up the price of ethereum classic versus the main chain after their fork and read up on the history of why that fork happened.

      If your goal is decentralization crypto is a failed experiment. Which is hardly a surprise given what we know about capitalism. It's basically impossible to prevent centralization without strong regulation and antitrust laws. We learned that in the 1800s. As someone pointed out crypto is basically speed running 150 years of financial history

      • I think you make some excellent points here but can't you still piggyback decentralization on top of what crypto has become, when you only use the exchanges to buy crypto and simply trading for goods after that point?

        If you are a major player yeah a 51% attack is a real risk to a huge wallet, but it you are a small player swimming in that sea it seems like maybe you are not at risk of someone basically saying your wallet does not contain anything or otherwise altering transactions in a way that would affect

        • No you can't. The problem is that the centralization results in currency manipulation that controls the prices of virtually all cryptocurrencies. There's a reason why we don't let just anyone issue currencies anymore. We used to at one point and it would result in constant hyper-deflation as Banks went in and out of business.

          What you're trying to do is a classic libertarian thing where you assume that the people at the top aren't really having any effect on you. They can and will manipulate the market t

          • What you're trying to do is a classic libertarian thing where you assume that the people at the top aren't really having any effect on you

            I am agreeing they can have an effect on you, but too much coordination is required between the entities that exist to do so... it's not just one player than can reach 51% but a combination of mining pools and/or exchanges. So the probability is that any actual manipulation that would occur (in terms of overriding the blockchain) would be external force that could compel

            • You're overestimating how many entities are involved here. It's two exchanges and about three mining pools. If you account for their CEOs and board members you're talking 8 to 10 people tops. When you recall that any industry is going to have conventions where everybody gets together it's not hard at all to imagine forms of collusion. Especially in the crypto markets where they openly flaunt any sort of existing laws.

              Price manipulation takes on a whole new aspect when we're talking a banking system with

      • Re:That's the exact opposite of what we've seen (Score:4, Insightful)

        by Opportunist ( 166417 ) on Sunday October 16, 2022 @02:38PM (#62971755)

        It's the currency equivalent of "there is no absence of rule, in an absence of rule, all that happens is that whoever has the most power will become the ruler".

      • Re: (Score:2)

        by cfalcon ( 779563 )

        > "For mined currencies the exchanges along with the mining pools can and will do 51% attacks "

        A)- Can they? Not really. Maybe some smaller cryptocurrency is subject to a 51% attack, something no one has heard of. Any mining pool participating in this will rapidly have everyone leave it, as a 51% attack will generally render the cryptocurrency that they are mining worthless. Actual threats include ideas like "maybe a rogue government will suddenly turn on a whole bunch of mining hardware, secretly acq

        • They absolutely can do a 51%. For the smaller currencies yes we've already seen them do it. For Bitcoin and ethereum the capability is there and that threat is more than enough to manipulate the market.

          As for will they, etherium already did a fork that left a lot of people high and dry. The miners haven't done it on bitcoin yet but a large scale market crash is all it would take. Imagine what's going to happen when the SEC cracks down on the Ponzi schemes and money laundering, a recession pulls all the
          • Just to be clear, the biggest risk by far to cryptocurrency value and innovative improvement is premature, ill-designed, and overreaching regulation.

            Such regulation is a self-fulfilling prophecy. It's so risky to innocents. We have to bring down the hammer!
            Make it so.
            Oh look, it all crashed. See, we told you.
      • I think it may very well be possible to prevent centralization in digital financial infrastructure.
        More use of randomization of validators, more fragmentation of validation into light-weight contributory computations done by the whole currency user population, and more use of zero-knowledge proofs, to prevent effective collusion even though there must be an assumption of "off-chain" information channels among would be colluders.

        Perhaps the pending over-regulation of currently overly-centralizing players wil

    • On the third hand, in 10 years when nobody remembers what cryptocurrency is, none of this will matter.

      The main goal is likely to prevent the crypto crash from spilling over into the real economy. Probably a moot point now that we've passed peak crypto.

      • Re:Keyword here is "US" regulators (Score:5, Insightful)

        by rsilvergun ( 571051 ) on Sunday October 16, 2022 @01:16PM (#62971519)
        I think that it's still important to keep an eye on it because big companies like Goldman Sachs are doing just that. Every large company is anxious to take a bunch of crypto and bundle it together into a security and then pass that security around like they did with mortgages in 2008. Eventually you can then take the bad security and sell it to a government or a pension or even better a government pension.

        Those kind of tricks are huge part of how we've moved 50 trillion dollars up the chain in the last 40 years. And if all else fails they'll hold us hostage and demand we bail them out or they'll take the entire economy and destroy it.

    • money laundering, lockouts, and other banking laws / Securities laws.
      Are big issues with crypto.

    • Re:Keyword here is "US" regulators (Score:4, Insightful)

      by Brain-Fu ( 1274756 ) on Sunday October 16, 2022 @01:52PM (#62971637) Homepage Journal

      The lack of regulation is what make crypto exchanges such wretched hives of scum and villainy. So, the popularity of these securities drives the need for regulation.

      Once regulated to the point of being safe and reliable, most of the appeal will vanish, and these securities will lose all relevance.

      At no point will these currencies actually be superior to existing currencies in any meaningful way.

      • At no point will these currencies actually be superior to existing currencies in any meaningful way.

        There is one huge way it is better, right now.

        That is in speed, and even cost, of transactions.

        I have multiple banks and if I realize I need to move money from one bank to another that day, no wire option will work. I have to drive to a branch, pull out cash, drive to another banks branch, deposit that cash.

        Even the pokiest crypto (BTC) will transfer in under 15 minutes or so.

        Also for some bank wires I am pa

        • I have several different bank accounts and never have any trouble moving money between them same-day, and in most cases it only takes a few minutes. And no. I'm not paying fees.

          • I have several different bank accounts and never have any trouble moving money between them same-day

            Really, how? Using ACH or wires I always have to wait for the next day for funds to be available.

            I would seriously like to know because it's a PITA when I have to do this even though both branches are close.

            • Re: (Score:2)

              by _merlin ( 160982 )

              That's entirely a US problem. Most of the world has free or at least very cheap transfers between any bank accounts within the country. You can do it through your bank's web site, app, or automated phone banking system.

              • Well certainly it affecting a country of 350 million people means it's not a problem whatsoever that BitCoin helps solve. :-/

                • It's a problem that's easily solved without bitcoin. A bitcoin transaction is far more expensive than a nominally free inter-bank transfer, and then you still need to turn the bitcoin into currency to actually use it. You guys just need to do a better job of regulating your financial sector. There's no need to involve something as convoluted and wasteful as bitcoin.

  • Who could have predicted that a federal agency tasked with regulating the currency are interested in regulating a new (competing?) currency?

    Inconceivable!

  • And...that was simple.

  • They cannot regulate crypto - its decentralized and global. What they can do is regulate the exchanges where it is converted to dollars. They will need all those new irs agents if people start using just crypto for payments and trades
    • Bullshit. "Decentralized" doesn't mean anything. First, because crypto is not decentralized (because of exchanges and mining pools) and second because governments can and will regulate crypto just like drugs or any other noxious substance.
      • Impossible. Without breaking encryption they cannot do anything with crypto unless they use supercomputers to do a 51% attack to take over the currency.

        • they can tax it, ban useing it, go after exchanges

        • they cannot do anything with crypto unless they use supercomputers to do a 51% attack to take over the currency.

          Some people argue the exchanges and mining pools at this point are large enough to easily do 51% attacks, though it seems like you would have to coordinate between several of them which makes it less likely to be used - a government could force the issue though for specific wallets.

          I don't own any crypto at the moment but if I did I wouldn't have nearly enough to have this potential be a concern f

          • If you were an exchange that has the power to do a 51% attack, would you talk about it, and make your whole assets immediately worthless in turn?

            I don't say that it's already possible, but if it is, you wouldn't hear about it.

        • That is a rubbish argument. Governments can regulate regular banks without hacking into their supercomputers.
          • Again, they would regulate the exchanges. You cannot regulate millions of computers globally that are decentralized and encrypted.
            • No, they would regulate YOU. Easy, just like they do with drugs. If YOU are caught with a bitcoin wallet in your possession, you go to jail. If YOU are caught transferring bitcoin to another wallet, you go to jail. If YOU are caught getting bitcoin off an exchange, you go to jail. If they find a bitcoin mining rig in YOUR basement, you go to jail. Sure, you can keep everything a secret, but you would still be a criminal. I don't think many mom-and-pop investors would still be interested.
    • They are talking about regulating issuers of so called "stable coins" which are basically just scrip supposedly backed by US dollars. Those share some algorithmic properties with more traditionally crypto-currencies (think BTC) but are really just a form of banking subject to massive fraud.

    • Re: (Score:2)

      by vadim_t ( 324782 )

      But the users are centralized and local. Yeah, they can't stop you from using crypto, but they can make it very legally hazardous to do so. They can easily go not only after exchanges, but users as well if they want to.

      Also, US laws is down to whatever Congress passes and it can be as arbitrarily draconian as you wish, including requirements that are nigh impossible for any entity to ever satisfy. Eg, they could require everyone to ensure they're not transacting with a blacklisted entity (in fact this alrea

      • There is not enough money and or resources to track millions and millions of crypto transactions that don't involve dollars with little to gain especially for small amounts

        • Re: (Score:2)

          by vadim_t ( 324782 )

          True. But crypto these days is squarely a "get rich" scheme. Nobody is using it to pay for pizza, at least not a significant amount of people.

          All that would be needed to collapse the current system is to keep busting people, and making sure to mix it up. Target exchanges, prominent influencers, and a bunch of random joes investing their retirement money for good measure.

          You don't need to bust everybody, nor even any significant proportion. You'd just have to make people really nervous about their position,

    • They can regulate anything they want. Good luck explaining to a judge that transactions can be immune from US law simply because they happened in a foreign currency and were processed by a foreign payment processor.

  • Pyrite Pete's failed prediction (Score:1)

    by Anonymous Coward

    On Monday April 26, 2021 @02:16AM UTC, Pyrite Pete [urbandictionary.com] had said:

    That was back when bitcoin had already fallen, and down to about $47K at the time. It should've been back up to "twice its value" no later than June 26 2021 - over one year ago. It is now sitting at only about $19K.

    Now that's what I call a prediction #FAIL!

  • Invest in more mental health and safe ways to get regulated drugs to discourage the use of darknet markets. Force Microsoft and Apple to be accountable for vulnerabilities in Windows and MacOS that cause ransomware to take place (including forcing them to continue to provide Windows 7 updates for people to upgrade to newer operating systems). Then do their job in reducing ponzi schemes and scammers. 99% of cryptocurrency use would disappear if this would happen and the market would solve itself.

  • "Stablecoin" (Score:5, Funny)

    by sjames ( 1099 ) on Sunday October 16, 2022 @02:18PM (#62971709) Homepage Journal

    Is "Stablecoin" some new euphemism for horse shit?

  • US could stop inflating their own currency first (Score:3)

    by phoenix321 ( 734987 ) on Monday October 17, 2022 @05:46AM (#62973149)

    Ironic enough that the country that is running amok with their own currency is trying to "regulate" other currencies. Printing trillions of dollars with no assets to back them up, giving away pallets of cash to foreign powers, increasing taxes and increasing the tax office to collect ever more, to then waste it into departments and institutions with no oversight that never get audited.

    And they want to regulate other currencies.

    They could start with the USD first and "regulate" that so it doesn't inflate to the moon, finally gainst state-of-the-art security against counterfeiting and then maybe, just maybe give it an asset base to back it up other than "government says so" and "cannon boats will come if you don't like our currency".

    If that's in place and working, then they can start regulating other currencies to prevent poor innocent speculative lunatics from gambling away their money. Right now, it seems the US is more bent on preventing any other currency from becoming a viable alternative to the inflated funny money dollar.

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