Over the past decade, cryptocurrency has taken the US consumer market by storm. opened up new ways to invest, raise funds, send money and even hedge against the US dollar inflation through Bitcoin.
But 2022 took a less rosy turn, as we've seen the collapse of FTX, Voyager, Celsius and others. In 2023, we have seen the Securities and Exchange Commission (SEC) go after multiple US crypto exchanges (i.e. Kraken, Coinbase (CURRENCY)Bittrex) in an ongoing turf war to regulate the US crypto market. Skeptics have started to grow in number and the question has been raised: is cryptocurrency dead or alive in the US?
To understand the current state of the cryptocurrency market, it is essential to examine the factors that have contributed to its volatility in recent years. One of the main reasons for the Market instability is the lack of regulatory oversight. Cryptocurrencies are decentralized, which means that they operate outside the control of governments or financial institutions. This creates the fear that cryptocurrencies will become a preferred tool for money laundering and tax evasion and other illegal activities. In addition, market volatility has been exacerbated by the lack of liquidity and the absence of reliable valuation metrics, which makes cryptocurrencies vulnerable to speculative trade.
Is Chamath Palihapitiya correct?
In an interview with CNBC, tech investor Chamath Palihapitiya proclaimed that "cryptocurrencies are dead In America”, citing the lack of regulatory clarity and the government's focus on the traditional financial system as reasons for the decline of the cryptocurrency market. He too stated that the volatility of the market and the lack of liquidity make it a bad investment option for most people. However, he acknowledged that cryptocurrencies may still have a future in other parts of the world.
This does not mean that Chamath thinks that cryptocurrencies are destined to die or could not thrive. in the U.S. Like many skeptics right now, it's the uncertainty of the US government. develop a proper framework and set of rules for crypto companies and projects to comply that scares investors and businessmen from the industry.
SEC crackdown on the US market
Most of this skepticism can be attributed to the SEC taking a firm stance on the regulation of the crypto market. Gary Gensler, chairman of the SEC, has defended the agency's crackdown on cryptocurrencies, stating that it is necessary to protect investors. Gensler has previously raised concerns about the lack of regulation in the cryptocurrency industry and has called for more oversight. In his latest comments, he argued that the SEC has a responsibility to ensure that investors are protected and that the market is free from fraud and manipulation.
Gensler has been heavily criticized for the SEC's lack of clarity and guidance on what Cryptocurrencies should be treated as securities. This was prominent on Capitol Hill in April, when Gensler testified before Congress, but was unable to clearly establish whether Ethereum (the secondlargest cryptocurrency in the world by market capitalization) is or is not a security.
Crypto is fighting back
Coinbase, one of the world's largest cryptocurrency exchanges, recently sued the SEC for participate in an unauthorized and illegal effort to regulate cryptocurrency. the demand comes after months of silence from the SEC regarding Coinbase's plans to launch a loan commodity that the SEC claims would qualify as a security. Coinbase has argued that the product is is not a security and that the SEC has overstepped its bounds in trying to regulate the cryptocurrency industry without proper authority.
In the lawsuit, Coinbase will argue that the SEC has not provided clear guidance on the regulatory status of cryptocurrencies and that their actions have created uncertainty in the market. The company also claims that the SEC's actions have hurt its business by delaying the launch of the loan product and cause damage to its reputation. Coinbase is looking for a court order to prevent the SEC from taking any action against the company and a statement that the loan proceeds are not a security under US law.
Cryptocurrencies are alive and stronger than you think
In the end, the US market has been instrumental in innovating the blockchain industry, driving new financial ideas and solutions through cryptocurrencies that can help millions of people all over the world gain access to traditional financial tools. Bitcoin and the rest of the The cryptocurrency market has seen a resurgence in price starting in 2023 and has remained strong in the wake of US dollar inflation, bank failures, and rising national debt, not to mention the SEC. watchdog trying to take a bite out of everything.
Like anyone, I hope and support that the crypto industry can persevere through these growing pains. The silver lining is that support is growing in Congress, many companies are helping to educate legislators, and courts are likely to encourage innovation and fair regulation. Ultimately, the fear that China will out-innovate the United States looms as an even scarier problem. threat. Time is ticking, but cryptocurrencies are still alive and kicking.
Brandon Zemp is an entrepreneur and investor who graduated with a bachelor's degree in neuroscience from Pitzer College in Claremont, California. He is author of The Economy of the Future: A Crypto Insider's Guide to the Tech Dismantling of Traditional Banking. Zemp made his mark early on as a trader in the fast-paced crypto market, soon establishing his first company, BlockHash LLC, a blockchain consultancy that provides educational resources for small business owners, students, developers, and investors. In Colombia, Zemp has started another blockchain consultancy, Blocolombia SAS, which is tailored to the Colombian economy. With Blocolombia, he has managed projects for politicians and other agencies in Colombia while helping to pioneer the country's blockchain ecosystem. Zemp is the host of the podcast. Blockhash: exploring the blockchain, where he interviews the top executives and founders of the industry.
