America's War on Crypto

JayDubya · Nov 30, 2023

Just mulling this around in my head...

If private cryptos somehow get shut down, criminalized, or banned, where do you think the majority of that money is going to go?

Don't PMs seem like one of the more logical destinations?

Then, the question becomes: what percentage of the money leaving crypto would one expect to see flow into metals?

Just for the sake of argument, thoughtfully decide what percentage you believe would flow out of crypto and into PMs.

Then, decide how much of that money will go into gold and how much into silver. (If you're willing, give us your reasoning on how you decide upon the percentage and the split.)

Lastly, calculate the impact you believe it will have or has the potential to have.

Remember, silver is an extremely small market, and it wouldn't take much money to dramatically move it.

pmbug · Dec 1, 2023

JayDubya said:
Just mulling this around in my head...

If private cryptos somehow get shut down, criminalized, or banned, where do you think the majority of that money is going to go?
...

Setting aside practical considerations on how a shut down/ban would work that allows crypto value to be redirected, there are a few things I can think of worth considering:

People (including VCs and institutions) invest in cryptos for different reasons. I think there is a significant percentage of investment capital in crypto that is chasing novel technology. Billions flow into crypto firms every quarter and some percentage of that is held as crypto tokens:

... Q3 2023 saw a cooling in the crypto sector, according to PitchBook’s latest Emerging Tech Research Report. A challenging environment for crypto assets mixed with regulatory uncertainty reversed much of the momentum from the first half of the year, with deal values falling to $1.8 billion, a 28.3% decrease from last quarter. Still, institutional adoption has continued its upward trajectory, and there are several startups working on making crypto accessible, including connecting different blockchain networks and streamlining often complex transactions. ...

Click to expand...

https://pitchbook.com/news/reports/q3-2023-crypto-report
Crypto ownership is global (some estimates on a global breakdown of crypto ownership here). Some percentage of investment in crypto must originate from locales where taxes, regulations, privacy concerns, security considerations or the political environment discourage investment in precious metals.
While spot ETFs are not yet approved and working in the USA, they do exist in other countries and they hold crypto tokens for institutional investors looking to diversify portfolios. These institutional investors many or may not already have allocations for precious metals and it's not clear how much of their crypto investments would be reallocated to precious metals if crypto were not an option.
People see the value proposition for various crypto tokens differently. I could be wrong here, but I think the general sentiment is that folks consider Bitcoin to be the closest analogue to digital gold and most every other crypto to be a speculative play on tech innovation (exposure to "the next big thing"). I would expect a decent percent of Bitcoin market cap might be redirected to gold were crypto not an option, but I suspect very little if any of the market cap for "alt coins" (any crypto but Bitcoin) would be.

Given those considerations, I think were crypto not an investment option, it is most likely than any reallocation to precious metals would likely be some low percentage of Bitcoin market cap. According to CoinMarketCap, Bitcoin's market cap is currently ~$756B. If we estimated anywhere from 10-25% of that might be reallocated to precious metals (and I think that is likely too high), we're talking about ~$75B to $189B.

Estimates for a market cap for gold vary wildly because it's hard to pin down hard numbers for gold ownership, but I found a website that attempted to calculate it:

...
The Market Capitalization of Gold is currently around $13.626 T.

This value was obtained by multiplying the current gold price ($2,065 per once) with the world's above ground gold reserves.

The amount of above ground reserves for Gold are estimated to be around 205,238 metric tonnes according to the World Gold Council (End-2021). Note that the estimated above the ground Gold reserves can vary by up to 20% from one source to another.

As a consequence it is safe to say that the the current Market Cap of Gold is between $10.901 T and $16.351 T.
...

Market Cap of Gold (precious metal)

The Market Capitalization of Gold is currently arround $18.433 T. The Market Cap of a precious metal is calculated by multiplying the above the ground reserves with its current market price

companiesmarketcap.com

...
The Market Capitalization of Silver is currently around $1.446 T.

This value was obtained by multiplying the current silver price ($25.69 per once) with the amount of silver that is estimated to have been mined so far.

The amount of Silver that is estimated to have been mined is 1,751,000 metric tonnes (CPM Group Silver Yearbook 2019). These values are approximations and estimating the Market Cap of silver is more complicated than for Gold.

It is also noteworthy that a large quantity of silver has been lost/destroyed due to industrial applications.
...

Market Cap of Silver (precious metal)

The Market Capitalization of Silver is currently arround $1.935 T. The Market Cap of a precious metal is calculated by multiplying the above the ground reserves with its current market price

companiesmarketcap.com

Based upon those numbers, we're talking about small but significant bump relative to the PM markets..

chieftain · Dec 1, 2023

Someone far wiser than myself (since passed on) said to me ten years ago, "if cryptocurrencies were a genuine threat, the MIC would have scuttled that ship before it even left dry dock."

pmbug · Dec 1, 2023

SEC continues to be a bad faith actor:

A federal judge on Thursday warned Securities and Exchange Commission (SEC) attorneys that he may sanction them for allegedly convincing a court to freeze a crypto firm's assets under "false and misleading" pretenses, a court filing shows.

According to an order issued by U.S. District Judge Robert Shelby of the U.S. District Court in Utah, the SEC's attorneys could be sanctioned for making "misleading" arguments about crypto project Debt Box's alleged efforts to transfer its assets and investors' funds overseas, leading a court to freeze the project's bank accounts. The SEC's "misrepresentations… undermined the integrity of the case's proceedings," in addition to causing Debt Box "irreparable harm," Judge Shelby said in an order.
...

U.S. Judge Warns SEC Over 'False and Misleading' Request in Crypto Case

A federal judge threatened to sanction the SEC's lawyers after their "false" arguments prompted a court to impose a temporary restraining order on crypto firm Debt Box.

www.coindesk.com

pmbug · Dec 5, 2023

Rep. Patrick McHenry (R-N.C.), arguably the crypto industry's most important advocate in the U.S. Congress, has decided not to seek another term, he announced in a post on X on Tuesday.

As McHenry, the chairman of the House Financial Services Committee, continues to shepherd two significant pieces of digital assets legislation toward floor votes in the House of Representatives, his decision could set a clock on getting that task accomplished. Rep. French Hill (R-Ark.), the chair of that panel's crypto-focused subcommittee, has already indicated that progress on the bills – one to regulate U.S. stablecoin issuers and one to establish rules for the wider crypto markets – will shift into the first months of next year.
...

House's McHenry Says He Won't Seek Reelection, Costing Crypto a Top Ally

Rep. Patrick McHenry, the chairman of the House Financial Services Committee who has shepherded crypto legislation this year, said he's decided not to run again next year.

www.coindesk.com

Well, that sucks.

JayDubya · Dec 7, 2023

JPMorgan's Jamie Dimon and Sen. Elizabeth Warren Team Up to Bash Crypto

Here's a shocker for you.
Breaking news: A banker says he would "close down" crypto currency

"I've always been deeply opposed to bitcoin, crypto, etc.," he told senators in a hearing examining the U.S. banking industry. "If I was the government, I'd close it down," he declared.

https://markets.businessinsider.com/news/currencies/jpmorgans-jamie-dimon-and-sen-elizabeth-warren-team-up-to-bash-crypto-1032879647

pmbug · Dec 7, 2023

Dimon knows that crypto adoption can hurt JPM's bottom line as growth of DeFi and non-bank payment systems expand. Warren is just a huge hypocrit trying to protect the banks that she publicly rails against all the time. Can you taste the freedom?

pmbug · Dec 7, 2023

Some candidates for POTUS are purportedly crypto protagonists:

...
Ramaswamy is one of the few politicians to specifically make crypto part of his campaign.

Ramaswamy announced a plan to drastically reduce the SEC workforce and relax regulations on the crypto industry, advocating for most cryptocurrencies to be treated as commodities outside the U.S. Securities and Exchange Commission's (SEC) jurisdiction, CoinDesk recently reported.

"It's nothing short of embarrassing that Gary Gensler, the SEC chair, couldn't even confirm in front of Congress whether Ethereum is a regulated security," Ramaswamy said. "This is another example of the administrative state going too far."

Robert F. Kennedy Jr. – who originally ran for president as a Democrat and is now a declared Independent – proposed exempting bitcoin from capital gains tax, backing the dollar with assets like gold and bitcoin, and supporting the right to self-custody bitcoin and run blockchain nodes, aiming to strengthen the dollar and encourage financial innovation and privacy.
...

Binance, SBF, ETH and Gensler Get Mentions at Republican Presidential Debate

Republican leadership contender Vivek Ramaswamy got the first crypto question.

www.coindesk.com

JayDubya · Dec 7, 2023

Apparently Simon Black feels the same way I do. He even used the same word "shocker"
Here's his latest:

Shocker: World’s biggest bank CEO hates crypto
December 7, 2023

Yesterday Senator Elizabeth Warren used a Wall Street oversight hearing to whine about cryptocurrency.

At one point, almost as if a well-choreographed football play, she passed the ball to Jamie Dimon — CEO of JP Morgan Chase, the biggest bank in the world — to “explain why crypto is such an attractive financial tool for terrorists, drug traffickers, and rogue nations?”

It’s hard to imagine a more loaded question.

Mr. Dimon gleefully caught the pass and said:

“I've always been deeply opposed to crypto, Bitcoin, etc. You pointed out the only true use case for it is criminals, drug traffickers, anti-money laundering [sic], tax avoidance... because it doesn't go through, as you mentioned, all these systems built up over many years — Know Your Customer, sanctions, OFAC [Office of Foreign Assets Control] — they can bypass all of that.”

What an astonishing display of complete and total ignorance on the part of Mr. Dimon and Ms. Warren.

This notion that Bitcoin is great for criminals is one of the most worn out, naive tropes about cryptocurrency that exists. Criminals can (and do) use virtually ANYTHING to launder money, conduct transactions, and extort their victims.

Fine art. Baseball cards. Government subsistence vouchers. Rare coins. Amazon gift cards. Popular consumer merchandise like iPhones. Sports betting. Prepaid credit cards. And yes, the US banking system.

At least with Bitcoin, every single transaction is publicly recorded on the blockchain, which means that government entities can track the movement of funds.

Frankly criminals are much better off using JPMorgan Chase for their illicit transactions.

Perhaps that’s why JPMorgan Chase was the bank of choice for Bernie Madoff, the man who ran one of the most infamous Ponzi schemes of all time. JPMorgan Chase facilitated decades of suspicious activities related Madoff’s fraud.

But that only scratches the surface of the bank’s involvement in criminality.

In 2020, JPMorgan Chase paid a $920 million criminal penalty for market manipulation, involving tens of thousands of fraudulent orders in precious metals and bond futures markets, which were placed and then canceled before execution.

And according to “the FinCEN files,” investigative reporters uncovered that JP Morgan “moved money for people and companies tied to the massive looting of public funds in Malaysia, Venezuela, and Ukraine.”

In total, JP Morgan may have facilitated over half a TRILLION dollars of money laundering between 1999 and 2017.

And you can find similar misdeeds across the banking industry.

For example, Wells Fargo’s rap sheet includes: forging customer signatures to open accounts in order to boost sales goals; selling unnecessary car insurance leading to 20,000 vehicle repossessions; a “software glitch” resulting in over 500 wrongful home foreclosures; overcharging 26x on foreign currency transactions; illegally repossessing military members' vehicles; and actually selling customer Social Security Numbers to identity thieves.

It’s also interesting to note that Jamie Dimon was the “personal banker” of Adam Neumann, WeWork's outrageously unethical founder.

Remember that Adam Neumann borrowed money from his company to buy office space, only to lease that office space back to the company at a profit, and bilk shareholders in the process.

He even changed the name of WeWork to We, then sold the rights to the word We to his own company for $6 million.

When WeWork tried to go public, JPMorgan Chase was its lead IPO advisor, but conveniently sold its $100 million stake just before the IPO crashed and burned.

Jamie Dimon was involved in all of this. But now he wants to take the moral high ground about crypto.

Do criminals use crypto? Of course, some criminals use crypto. Some criminals also use iPhones and fly on Delta Airlines. And some criminals have accounts at JPMorgan Chase.

Yet Dimon and Warren single out crypto, absurdly claiming that criminality is the “only” use case.

I doubt they’ve ever bothered to read the original white paper, in which the clearly stated intent of Bitcoin was to be a medium of exchange for online transactions — a common currency of the Internet.

Over time, however, Bitcoin has become a more speculative instrument... which is probably its biggest use case to date; plenty of people buy Bitcoin because they think it will go up in price. Or they use it as a long-term store of value.

Another major use case of crypto, of course, is the tokenization of financial contracts which eliminates middleman bankers like Jamie Dimon. So it’s no surprise that Mr. Dimon hates crypto.

But perhaps the most ridiculous thing he said at that hearing was, “If I was the government, I'd close it down.”

He seems to think that the government could simply ban cryptocurrency, and, poof, demand would vanish.

Because that worked so well during alcohol prohibition, or the never-ending war on drugs, or prohibiting illegal downloads of movies on the Internet.

Crypto would be even harder to control.

Cryptocurrency offers a decentralized, peer-to-peer currency which can travel across borders in seconds. That governments can’t control it is a feature, not a bug.

That means a future where people can’t be de-banked by Justin Trudeau for protesting against his vaccine mandates. It means keeping personal custody of your funds, without having to trust third parties like JPMorgan Chase who treat you like a criminal (when they aren’t too busy acting like criminals).

Jamie Dimon is supposed to be a sophisticated banker and business leader. Yet his words are steeped in so much irony, drenched in so much hypocrisy... and he doesn’t even realize it.

It is so obvious that significant elements of cryptocurrency are here to stay; even the Federal Reserve is toying with crypto.

So for Jamie Dimon to say “close it down” sounds like a guy shouting at windmills. Or worse — like a scarcity-minded medieval ruler in the Ottoman Empire banishing the printing press.

We’ll see what happens if Bitcoin continues rising; my guess is that JP Morgan will eventually start recommending their private clients buy crypto again... and Dimon will act like he knew it all along.
Simon Black, Founder
Sovereign Man

pmbug · Dec 7, 2023

The Bank of England is getting worried:

...
Banks are becoming more positive about using crypto technologies such as programmable ledgers and smart contracts for the tokenization of money and real-world assets (RWA), the central bank said in the biannual report published Wednesday.

Tokenization, the process of issuing a digital representation of an asset, is a growing part of the crypto ecosystem and is forecast to become a $10 trillion market by 2030, according to asset management company 21.co. Last month, HSBC, one of the world's largest banks, said it plans to start a digital-assets custody service for institutional clients focusing on tokenized securities. Earlier this week, Societe Generale, one of France's largest banks sold 10 million euros ($10.8 million of tokenized green bonds on the Ethereum blockchain. And Archax, a U.K. registered crypto exchange, is planning on releasing an exchange for tokenized assets.
...

Asset Tokenization on Blockchains Could Increase Systemic Risks: BOE

Banks are becoming more positive about using crypto technologies for the tokenization of money and assets, the BOE said.

www.coindesk.com

They issue a report fear mongering over a bunch of issues and then admit the risks they are worried about are limited at the moment. There is a race happening right now between private sector decentralized crypto and state owned centralized systems (both existing fiat/monetary and CBDC). Central Banks aren't exactly going to be unbiased in their assessment of free market crypto.

pmbug · Dec 12, 2023

U.S. Senators Elizabeth Warren (D-Mass.)and Roger Marshall (R-Kan.) are introducing today the Digital Asset Anti-Money Laundering Act of 2022, bipartisan legislation that would mitigate the risks that cryptocurrency and other digital assets pose to the United States’s national security by closing loopholes in the existing anti-money laundering and countering of the financing of terrorism (AML/CFT) framework and bring the digital asset ecosystem into greater compliance with the rules that govern the rest of the financial system.

“Rogue nations, oligarchs, drug lords, and human traffickers are using digital assets to launder billions in stolen funds, evade sanctions, and finance terrorism,” said Senator Elizabeth Warren. “The crypto industry should follow common-sense rules like banks, brokers, and Western Union, and this legislation would ensure the same standards apply across similar financial transactions. The bipartisan bill will help close crypto money laundering loopholes and strengthen enforcement to better safeguard U.S.national security.”

“Following the September 11, 2001 terrorist attacks, our government enacted meaningful reforms that helped the banks cut off bad actors’ from America’s financial system. Applying these similar policies to cryptocurrency exchanges will prevent digital assets from being abused to finance illegal activities without limiting law-abiding American citizens’ access,” said Senator Roger Marshall. “Our common-sense bill will make it harder for criminals to finance their criminal activities, like the trafficking of illicit fentanyl through the dark web, that can harm innocent Kansans.”

The Treasury Department, Department of Justice, and other national security and financial crime experts have warned that digital assets are increasingly being used for money laundering, theft and fraud schemes, terrorist financing,and other crimes. Rogue nations like Iran, Russia, and North Korea have used digital assets to launder stolen funds, evade American and international sanctions, and fund illegal weapons programs. In 2021, cyber criminals raked in at least $14 billion in digital assets – an all-time high. Binance, the world's-largest crypto platform, was reported to have laundered over $10billion for criminals and sanctions evaders over the last few years.

The Digital Asset Anti-Money Laundering Act would:

Extend Bank Secrecy Act (BSA) responsibilities, including Know-Your-Customer requirements, to digital asset wallet providers, miners, validators, and other network participants that may act to validate, secure, or facilitate digital asset transactions by directing FinCEN to designate these actors as money service businesses (MSBs).

Address a major gap with respect to “unhosted” digital wallets – which allow individuals to bypass AML and sanctions checks – by directing FinCEN to finalize and implement its December 2020 proposed rule, which would require banks and MSBs to verify customer and counterparty identities, keep records, and file reports in relation to certain digital asset transactions involving unhosted wallets or wallets hosted in non-BSA compliant jurisdictions.

Prohibit financial institutions from using or transacting with digital asset mixers and other anonymity-enhancing technologies and from handling, using, or transacting with digital assets that have been anonymized using these technologies.

Strengthen enforcement of BSA compliance by directing the Treasury Department to establish an AML/CFT compliance examination and review process for MSBs and directing the Securities and Exchange Commission and Commodity Futures Trading Commission to establish AML/CFT compliance examination and review processes for the entities it regulates.

Extend BSA rules regarding reporting of foreign bank accounts to include digital assets by requiring United States persons engaged in a transaction with a value greater than $10,000 in digital assets through one or more offshore accounts to file a Report of Foreign Bank and Financial Accounts (FBAR) with the Internal Revenue Service.

Mitigate the illicit finance risks of digital asset ATMs by directing FinCEN to ensure that digital asset ATM owners and administrators regularly submit and update the physical addresses of the kiosks they own or operate and verify customer identity.

Warren, Marshall Introduce Bipartisan Legislation to Crack Down on Cryptocurrency Money Laundering, Financing of Terrorists and Rogue Nations | U.S. Senator Elizabeth Warren of Massachusetts

The Official U.S. Senate website of Senator Elizabeth Warren of Massachusetts

www.warren.senate.gov

Bullet point 1 is impossible and shows that Warren et al do not understand crypto. Validators and "other network participants" do not have customers and do not collect information on address owners.

Bullet point 3 might be unconstitutional. I'm guessing that will get tested should this bill pass.

Bullet point 6 sounds onerous. I don't know if crypto ATMs currently collect customer information or not.

chieftain · Dec 12, 2023

The Achilles' Heel of Blockchain: How Validators Became the Target of a Billion-Dollar Threat | HackerNoon

Looking at how blockchain validators exploited in billion-dollar security threat.

hackernoon.com

pmbug · Dec 12, 2023

That's a great example of what I was talking about in my comment about the latest BIS report on CBDC:

https://www.pmbug.com/threads/tin-f...nd-the-total-perspective-vortex.75/post-87583

pmbug · Dec 15, 2023

SEC continues (again) to be a bad faith actor:

U.S. crypto exchange Coinbase's petition to the Securities and Exchange Commission (SEC) to prod it toward a system of tailored rules for digital assets was rejected by the regulator on Friday.

"The existing securities regime appropriately governs crypto asset securities," said Chair Gary Gensler, in a statement issued with the denial. Besides arguing that the SEC has sufficient authority in today's laws, he said the industry watchdog has already been engaging in rule proposals to directly regulate crypto businesses, and its enforcement division has also been able to address wrongdoing.

Gensler made a third argument, too, that "it is important to maintain commission discretion in setting its own rulemaking priorities."
...
Commissioners Hester Peirce and Mark Uyeda opposed the SEC's denial.

"We hope that interested persons continue to posit specific rule changes, guidance, and exemptions that would form a useful basis for the crypto industry to continue its development within the United States," the Republican commissioners argued in a statement. "While we are disappointed that the commission is not hosting these important conversations, we will have an open ear for conversations that others host and the ideas that emerge from those conversations."
...

U.S. SEC Denies Coinbase's Push for Crypto Regulations as 'Unwarranted'

The U.S. exchange had formally petitioned the agency to start writing comprehensive crypto rules, but after "careful" consideration, the SEC said no.

www.coindesk.com

Joe King · Dec 15, 2023

pmbug said:
. I don't know if crypto ATMs currently collect customer information or not.

Pretty sure they do. At least these days.

Didn't use to though. I knew of one at a bar/restaurant. It was just a small metal box on the wall that had a slot for cash to be inserted and another where a paper receipt came out that you would then use on a website to collect your actual bitcoin and send them to any wallet you wanted.
The website required an account, but signing up was just like it is on most forums. Ie: make up a user name and password, and you were in.

Hadn't been in that place in quite awhile, so I am not sure if it is still there or not. It was the only one like it that I knew of. All the others I knew of, all wanted some form of ID.

searcher · Dec 17, 2023

re: post 54

US SEC says no to new crypto rules; Coinbase asks court to review

WASHINGTON, Dec 15 (Reuters) - The U.S. Securities and Exchange Commission on Friday denied a petition by Coinbase Global (COIN.O) seeking new rules from the agency for the digital asset sector, which the country's largest crypto exchange then sought to challenge in court.

The five-member commission, in a 3-2 vote, said it would not propose new rules because it fundamentally disagreed that current regulations are "unworkable" for the crypto sphere, as Coinbase has argued. Coinbase later said it had filed a petition for review of the SEC's decision in court.

The dispute was the latest in a broader tug-of-war between the crypto sector and the top U.S. markets regulator, which has repeatedly said most crypto tokens are securities and subject to its jurisdiction. The agency has sued several crypto companies, including Coinbase, for listing and trading crypto tokens which it says should be registered as securities.

More:

https://www.reuters.com/technology/us-sec-denies-coinbase-petition-crypto-rulemaking-2023-12-15/

pmbug · Dec 18, 2023

Ripple, Coinbase, a16z Invest $78 Million In Pro-Crypto PAC Ahead Of US Elections | ZeroHedge

ZeroHedge - On a long enough timeline, the survival rate for everyone drops to zero

www.zerohedge.com

That's a respectable war chest.

pmbug · Dec 20, 2023

Can you handle sarcasm? If not, definitely do not click and read the following...

https://www.coindesk.com/consensus-magazine/2023/12/20/if-youre-in-crypto-youre-a-criminal/?utm_medium=referral&utm_source=rss&utm_campaign=headlines

pmbug · Dec 21, 2023

Chew on this a bit:

...
Decentralized financial solutions and "DeFi wallets" like Zeal–along with exchanges and smart contracts–present the largest potential threat to the U.S. financial industry ...

Will banks win or lose in the new generation of digital wallets?

Multi-function wallet apps will support shopping, loyalty, paying at the pump or EV charging station and crypto asset management, challenging the roles of U.S. financial institutions.

www.americanbanker.com

Middlemen recognize that crypto can cut them out of the loop. Guess who is behind America's War on Crypto? Jamie Dimon hasn't been shy about his position.

pmbug · Dec 22, 2023

...
Fintech credit, which includes peer-to-peer and marketplace lending as well as lending facilitated by major technology firms, is witnessing rapid growth worldwide. However, its responsiveness to monetary policy shifts remains largely unexplored. This study employs a novel credit dataset spanning 19 countries from 2005 to 2020 and conducts a PVAR analysis to shed some light on the different reaction of fintech and bank credit to changes in policy rates. The main result is that fintech credit shows a lower (even non-significant) sensitivity to monetary policy shocks in comparison to traditional bank credit. ...

Fintech vs bank credit: How do they react to monetary policy?

Fintech credit, which includes peer-to-peer and marketplace lending as well as lending facilitated by major technology firms, is witnessing rapid growth worldwide.

www.bis.org

The BIS did not specifically mention crypto (DeFi) in this abstract, and I have not skimmed the full report yet, but it certainly seems to me that the BIS is saying that crypto (DeFi is one form of Fintech credit) doesn't play central bank games.

pmbug · Dec 29, 2023

pmbug said:
... Guess who is behind America's War on Crypto? Jamie Dimon hasn't been shy about his position.

Lol:

JPMorgan CEO's Bitcoin Bashing Is a 'Do as I Say, Not as I Do' Situation

Jamie Dimon's bank agreed to play a key role with BlackRock's proposed bitcoin ETF, just weeks after he told U.S. senators: "I've always been deeply opposed to crypto, bitcoin, etc."

www.coindesk.com

pmbug · Jan 5, 2024

Constantinos Herodotou - Governor of the Central Bank of Cyprus said:
...
Ladies and gentlemen, as Bigtechs are further expanding into digital finance, there are risks to our payment system, as well as to our monetary and financial stability, especially from a potential issuance of their own currency. This is not mere speculation, as evidenced by the decision of PayPal to launch its own dollar-denominated stablecoin. PayPal has a user base 1,3 times bigger than the Eurozone's population - therefore such a venture poses challenges at least under three areas:

a) Firstly, to the functioning of our payment system. Stablecoins are structured as 'closed-loop solutions' that restrict payments to users who adopt a particular payment tool.

b) Secondly, if citizens prefer to use stablecoins issued by Bigtechs instead of money issued by a central bank, then public money could ultimately lose its role as an anchor that has been safeguarding for decades the convertibility of commercial bank deposits or liquidity, into central bank money at par value. This is what actually happens without realising it when we withdraw cash from an ATM: our sight deposits, that are a liability for commercial banks are turned into a liability for the central bank, with cash being the safest form of money and the reason why we trust the currency. In the absence of a digital euro, we would risk losing central bank money as a visible symbol, linking the various forms of private digital money to the State. This could undermine trust in the euro area and ultimately in its monetary sovereignty.
...

More:

Constantinos Herodotou: Navigating the technological revolution - the central banker's perspective

Speech by Mr Constantinos Herodotou, Governor of the Central Bank of Cyprus, at the 11th Banking Forum & Fintech EXPO, Nicosia, 7 December 2023.

www.bis.org

If central banks managed real money, this wouldn't be an issue. Central banks don't want free markets or competition. They just want control.

pmbug · Jan 10, 2024

Commissioner Peirce dropping truth bombs about the SEC's bad faith in the spot BTC ETF saga:

SEC.gov | Out, Damned Spot! Out, I Say![1]: Statement on Omnibus Approval Order for List and Trade Bitcoin-Based Commodity-Based Trust Shares and Trust Units

Out, Damned Spot! Out, I Say! : Statement on Omnibus Approval Order for List and Trade Bitcoin-Based Commodity-Based Trust Shares and Trust Units Commissioner Hester M. Peirce January 10, 2024

www.sec.gov

pmbug · Jan 11, 2024

ZH provides a little more color to the story (and Hester Peirce's comments as cited in my previous post):

SEC Democrats Dissent, 'Crypto Mom' Commissioner Exposes "Arbitrary & Capricious" Slow-Walking Of Spot Bitcoin ETF Approval | ZeroHedge

ZeroHedge - On a long enough timeline, the survival rate for everyone drops to zero

www.zerohedge.com

pmbug · Jan 16, 2024

Ripple CEO Brad Garlinghouse fired off criticism at U.S. Securities and Exchange Commission Chairman Gary Gensler on Tuesday, calling the SEC chief a "political liability."

The comment from Garlinghouse was directed at Gensler over the SEC chief's track record on regulating the crypto industry, lengthy delays to approving spot bitcoin exchange-traded funds, and high-profile lawsuits against companies like his.

"I do think the chair of the SEC, Gary Gensler, is a political liability in the United States. And I think he's not acting in the interests of the citizenry, he's not acting in the interests of the long-term growth of the economy, and I don't understand it," Garlinghouse said.

"I think at some point there will be a new chair of the SEC, and I think that will be a good thing for the American people."
...
"One of the definitions of insanity is doing the same thing over and over again and expecting a different outcome," Garlinghouse said, describing what he perceives as Gensler's ongoing campaign against crypto. "I think Gary Gensler is doing the same thing over and over again, and he thinks that somehow he's going to win in court. He has continued to lose in court."
...

https://www.cnbc.com/2024/01/16/ripple-ceo-calls-us-sec-chair-gary-gensler-a-political-liability.html

Puppets dance on strings. Who is pulling Gensler's?

pmbug · Jan 20, 2024

...
Both sides – the SEC and Coinbase – agreed in a Wednesday court hearing that the tokens themselves aren't securities. The SEC lawyers argued that each trade amounted to an investor buying into a token ecosystem in which the purchaser is hoping to share in its gains, and as long as a single one of those transactions could be considered an investment contract, Coinbase has broken securities law. But the company said these are secondary-market trades in which no contract is in place, so they can't be securities.

Coinbase is seeking to talk Judge Katherine Polk Failla of the U.S. District Court for the Southern District of New York into throwing out the SEC's accusations that it's breaking the law. Failla decided against making a decision from the bench and didn't explicitly reveal which way she'll rule as she went through 14 pages of questions that challenged the positions of both the regulator and the business over more than four hours.

Her eventual decision – expected in the coming weeks, though she didn't hint at a timeline – will join a mixed bag of other recent rulings from her fellow judges in the same court. It'll either reinforce the SEC's pursuit of crypto platforms as unregistered exchanges dealing in unregistered securities, or it'll add to the agency's legal losses on this front and further strengthen the industry's view that the regulator is overreaching. Either way, similar SEC cases against such exchanges as Binance and Kraken could also turn on Judge Failla's view.
...

More:

https://www.coindesk.com/policy/2024/01/17/coinbase-and-sec-dig-in-with-us-judge-on-whether-securities-law-applies-to-listings/

pmbug · Jan 29, 2024

A potential new prong in the war on crypto:

After the 2008 global financial meltdown, Congress set up a round table of regulators who could wield a unique tool against the next emerging threats. The Financial Stability Oversight Council (FSOC) can tag companies with systemic-risk labels that saddle them with tremendous new restrictions, and the crypto sector has the council's attention.

In November, the FSOC – a collection of the heads of the U.S. Department of the Treasury, Federal Reserve, Securities and Exchange Commission and other agencies – erased some key changes from the Trump era that had neutered the council's power to designate companies as threats. It's now back in full effect, even if the authority has long remained dormant.

At any time, the council could decide that one of the giants in the digital assets sphere – say, a stablecoin issuer such as Circle – could wound the wider financial system in the event of a failure, something akin to American International Group Inc.'s role in the mortgage collapse of 2008. When the FSOC affixes that tag on a business, it becomes a regulatory ward of the Fed, subjected to a number of compliance demands and supervision.

So far, there's no sign such a move is coming, but the council has been warning of stablecoins' emerging dangers to financial stability, and congressional Republicans finally brought this potentially into the public in a subcommittee hearing this month. As most of the digital assets industry was glued to news of the spot bitcoin exchange-traded funds (ETFs), lawmakers on the House Financial Services Committee asked pointed questions about exactly what the uber regulator has in mind for crypto.
...

More:

https://www.coindesk.com/policy/2024/01/29/a-backdoor-regulatory-option-haunts-us-crypto/?utm_medium=referral&utm_source=rss&utm_campaign=headlines

pmbug · Jan 31, 2024

SEC's bad faith exposed in court:

...
The U.S. Securities and Exchange Commission (SEC) has requested to dismiss its lawsuit against crypto startup Debt Box. The decision comes after the SEC admitted to making inaccurate statements in court.

The lawsuit, initially filed against Digital Licensing Inc., which does business as Debt Box, accused the company of defrauding investors of at least $49 million. The SEC claimed that Debt Box offered “node licenses” for mining cryptocurrencies that were never actually mined. This action was part of a broader crackdown by the SEC on cryptocurrency firms, under the leadership of Chair Gary Gensler who has repeatedly stated that most cryptocurrencies are securities.

However, the case took a turn when the SEC’s attorneys acknowledged that they had fallen short of the court’s expectations for accuracy and candor. This admission came after U.S. District Court Judge Robert Shelby in Utah criticized the SEC lawyers and demanded explanations for what he termed “false or misleading” statements.

The SEC had previously asserted that Debt Box was attempting to transfer assets overseas to evade U.S. jurisdiction, a claim that Judge Shelby found to be misrepresented. Judge Shelby gave the SEC a “show cause order,” which basically meant the SEC had to give a good reason or explanation for its actions.
...

SEC Moves to Dismiss Lawsuit Against Crypto Company Debt Box, Citing Inaccuracies in Court – Legal Bitcoin News

Goldhedge · Jan 31, 2024

THIS Is What They're Hiding About BlackRock - Whitney Webb Bitcoin Prediction

13m

searcher · Feb 2, 2024

Senator Elizabeth Warren targets illicit crypto finance with legislative proposal

In a recent Senate Banking Committee hearing focused on fraud and scams within the banking system, Senator Elizabeth Warren, alongside other Democratic lawmakers, criticized the role of cryptocurrencies in illicit finance and scams. Warren, known for her critical stance on cryptocurrencies, has been actively promoting her Digital Asset Anti-Money Laundering Act to tighten the oversight of crypto-related activities. This legislation, which seeks to include miners, validators, and wallet providers under the Bank Secrecy Act requirements, including know-your-customer (KYC) rules, has stirred controversy within the crypto industry, with some arguing that it is unconstitutional and overly broad.

More:

https://www.msn.com/en-us/news/poli...S&cvid=5fd10bcc568949b2893ddeb612260b28&ei=22

pmbug · Feb 2, 2024

I moved your post @searcher . Sen. Warren is a lead actor in the war on crypto. Her public rhetoric and her legislative efforts are all conducted in bad faith.

pmbug · Feb 2, 2024

Goldhedge said:
THIS Is What They're Hiding About BlackRock - Whitney Webb Bitcoin Prediction
13m

Synopsis?

pmbug · Feb 5, 2024

It looks like the PR battle over how much energy Bitcoin mining consumes is not over after all. A while ago, I declared that it had been won – the tireless pushback from people who actually spend a lot of time researching this had muted the criticism and concern. Facts and reasoning had vanquished fear-mongering and use of trigger words.

How naïve.
...

https://www.coindesk.com/consensus-magazine/2024/02/05/bitcoin-a-new-regulatory-attack-vector/

BeefJerky · Feb 5, 2024

I'm still trying to figure out how Liberty Dollar was shut down but somehow it's okay to just make monopoly money on your computer and even trade derivatives of it on exchanges.

Dollars · Feb 6, 2024

Whatever you do don’t call it a dollar!

BeefJerky said:
I'm still trying to figure out how Liberty Dollar was shut down but somehow it's okay to just make monopoly money on your computer and even trade derivatives of it on exchanges.

Voodoo · Feb 6, 2024

Just so you know who the $EC is right now this is a good 5 min beatdown of Comrade Gensler.

searcher · Feb 8, 2024

Here or the regular crypto thread??? WTH.......I'm already here.

Bitcoin Mining and the Politicization of a Once Reputable Federal Agency

The Department of Energy's statistics wing is feigning an "emergency" to attack legitimate U.S. businesses and score political points, Texas Blockchain Council President Lee Bratcher and Chamber of Digital Commerce CEO Perianne Boring write.

The Energy Information Administration’s (EIA) mandatory emergency survey of electricity consumption data represents the latest in a politically motivated campaign against bitcoin mining, cryptocurrency, and U.S.-led innovation. We believe this should cause concern for all industries that rely on data centers as part of their operations.

Instead of focusing on improving our aging electricity infrastructure and working to ensure grid stability, the Department of Energy and EIA have prioritized taking unprecedented steps to target private businesses for political purposes. This action is an abuse of authority in order to further the Biden administration’s public goal “to limit or eliminate” U.S. bitcoin miners, while pleading ignorance to U.S. miner’s utilization of renewable resources and uniquely flexible operations.

See also: The U.S. Government Seems to Be Closing in on Bitcoin Mining | Opinion

The survey asks for information that goes beyond the typical requests made by the EIA. For decades the EIA has conducted itself as an apolitical information gathering body within the Department of Energy (DOE). Had this survey been in-line with previous surveys, there would be no cause for alarm.

More:

https://www.coindesk.com/consensus-magazine/2024/02/08/bitcoin-mining-and-the-politicization-of-a-once-reputable-federal-agency/

pmbug · Feb 10, 2024

February 7, 2024

The Honorable Gary Gensler
Chairman
U.S. Securities and Exchange Commission
100 F Street NE
Washington, DC 20549

Dear Chairman Gensler:

We write to express our concerns regarding developments in the Securities and Exchange Commission’s (“the Commission”) enforcement proceedings against Digital Licensing Inc., also known as “DEBT Box,” the company’s principals, and 13 other defendants.

As part of these proceedings, the Commission sought a temporary asset freeze, restraining order, and other emergency relief against DEBT Box, all of which were granted by the U.S. District Court for the District of Utah. However, the Court became aware that “the Commission made materially false and misleading representations…and undermined the integrity of the proceedings.”1 In the meantime, the restraining order froze the defendants’ personal and business assets, shut down DEBT Box, and caused its native token to crash by more than 56 percent. The Commission’s Enforcement Division Director, Grubir Grewal, admitted to these misrepresentations in its request that the court refrain from levying sanctions. We are greatly concerned by the Commission’s conduct in this case. It is unconscionable that any federal agency—especially one regularly involved in highly consequential legal procedures and one that, under your leadership, has often pursued its regulatory mission through enforcement actions rather than rulemakings—could operate in such an unethical and unprofessional manner.

In response to Judge Shelby’s claims, the Commission wrote in a December filing that “Commission counsel made a representation during the July 28, 2023 hearing that, unbeknownst to him at the time, was inaccurate” and that “Commission attorneys failed to correct that statement when they learned of the inaccuracy.” This statement suggests the error was one of negligence rather than malevolence. But even this charitable explanation is unacceptable. That the Commission counsel could be so unfamiliar with the relevant facts of the case, and that Commission attorneys could have such little regard for the veracity of evidence presented to the Court, is deeply troubling. Regardless of whether Commission staff deliberately misrepresented evidence or unknowingly presented false information, this case suggests other enforcement cases brought by the Commission may be deserving of scrutiny. It is difficult to maintain confidence that other cases are not predicated upon dubious evidence, obfuscations, or outright misrepresentations.

The Commission’s response stated that the Division of Enforcement would require staff to undergo “mandatory training…about the duty of accuracy and candor and the duty to correct any inaccuracies as soon as they come to light.” Perhaps such training in the most elementary aspects of legal conduct is necessary. However, we are skeptical that this response and the Commission’s pledge to reshuffle personnel is proportionate to the very serious allegations outlined by the Court.

As you know, the Commission’s mission to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation is of the utmost importance. The public must have well-placed confidence in the Commission’s enforcement actions, its motives for undertaking them, and its professionalism when carrying them out. This trust is undermined, and your mission compromised, by episodes like the DEBT Box case.

Thank you for your attention to this important matter.

Sincerely,
JD Vance, Thom Tillis, Bill Hagerty, Cynthia Lummis, Katie Boyd Britt
(United States Senators)

https://www.vance.senate.gov/wp-content/uploads/2024/02/bcEg.pdf

Peter89 · Feb 12, 2024

Hi @pmbug
I mentioned Operation Choke Point 2 on another forum but I was confronted with the argument that Operation Choke Point 2 is over, all literature about it being one year old.

I replied
a) that currently crypto related businesses in the USA have the same difficulties in doing business with banks that they had last year, and
b) that the Biden administration hasn't lowered their pressuring the banking sector to avoid providing banking services to crypto related businesses.

Since neither me nor my interlocutors over there are US based, but you are, maybe you could enlighten us?
Thanks

pmbug · Feb 12, 2024

Peter89 said:
... I was confronted with the argument that Operation Choke Point 2 is over, all literature about it being one year old. ...

I have not seen any new news on the subject. As far as I know there is still litigation pending for Custodia Bank et al. but court action in those cases take a while to play out. This is from a month ago:

A court battle between a novel bank that wants to do business in crypto and the Federal Reserve Board is coming to a head.

Zoom in: The central question in this case is whether a politically motivated Fed intervened in a process conducted by one of the reserve banks it oversees, wrongfully denying Custodia Bank a Fed master account.

The big picture: One major unresolved question that reared its head in 2023 relates to Operation Choke Point 2.0.

Crypto is arguing that it is being unfairly shut out from key services like banking, whereas bank regulators have justified their arm's-length stance, citing systemic risk.

A win for Custodia may not be a broader win for crypto, but could open the door for other banks that want to do business with the industry.

...
What we're watching: The court's decision on that matter could come by late March, and if it agrees with Custodia, it would order the Fed to grant the bank a master account — an immediate win for Custodia.

If the court defers judgment, the case would go to a bench trial in April — that is, a trial without a jury.

https://www.axios.com/2024/01/17/custodia-bank-fed-crypto-lawsuit-bs

I'm not sure what happened with crypto businesses that were debanked in the wake of the Signature bank destruction. When a startup crypto business gets denied banking accounts, it doesn't generally make the news. Also, Senator Warren is still banging the drum on debanking crypto in the name of anti-money laundering (AML). She has posted dumb tweets on X and introduced legislation in the Senate within the last few months.

In short, no major battles have made the news, but the war isn't over.

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Stablecoins - Kind of a Big Deal

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US SEC says no to new crypto rules; Coinbase asks court to review

THIS Is What They're Hiding About BlackRock - Whitney Webb Bitcoin Prediction

Senator Elizabeth Warren targets illicit crypto finance with legislative proposal

THIS Is What They're Hiding About BlackRock - Whitney Webb Bitcoin Prediction

Bitcoin Mining and the Politicization of a Once Reputable Federal Agency

The Department of Energy's statistics wing is feigning an "emergency" to attack legitimate U.S. businesses and score political points, Texas Blockchain Council President Lee Bratcher and Chamber of Digital Commerce CEO Perianne Boring write.