Not About Gary Gensler vs US Congress
Latest story in the crypto news has been SEC Chair Gary Gensler's appearance before US Congress. SEC under Gensler's leadership has become the main villain against crypto due to its hostile actions against cryptos, exchanges, and crypto based businesses. The core issue among government regulatory agencies and crypto world hasn't really been hostile behavior of these agencies against technological innovation, but rather the inability to provide legal clarity. Gensler's appearance in a public hearing attracted a lot of attention, as many were interested to get insights into his thoughts about crypto and perhaps even gain more clarity of SEC's mission on crypto.
The hearing ended up being a disappointment. Gensler was either unable or unwilling to provide his thoughts on crypto, nor did he present a clarity regarding SEC's methods or positions on crypto regulations. It doesn't seem like we will see any clarity in this matter any time soon. This has already been recognized by some exchanges who one by one deciding to stop their operations in the US and instead shifting their focus to more global markets.
I am often made fun of for speaking highly about Gensler in the past. Those had to do with the lectures Gensler had on blockchain and bitcoin when he was a professor at MIT. Otherwise I had no thoughts about him as a person. I only thought he was among the people who had an understanding of blockchain technologies and bitcoin in particular. From his lectures it is clear he does have a good understanding of this innovation. Perhaps that is the reason why he was able to declare bitcoin as not a security and rather a commodity. Such position was a welcome news for bitcoin and crypto world. While it was one of the good things Gensler has done and deserves credit for, he was unable or unwilling to clearly state his position regarding any other individual crypto assets or networks.
This has become even more evident during the Congressional hearing. Gensler was asked multiple times a "yes or no" question, regarding his position about Ethereum. He didn't yes, nor did he say yes. Instead he kept repeating the script he has memorized as a generic response. This and other actions of SEC demonstrate how the agency is unwilling to provide any kind of clarity. That goes against what they claim to be doing - protecting consumers and investors. Investors are the among the group that need the clarity most. Not being able to give clear answer for such a simple question creates more confusion instead. If the number two crypto asset by market cap can have a clear classification by the securities regulating agency, others don't have any chance.
I don't know if SEC actually has a good plan they have intention to implement, or bigger vision for regulation. One would hope so. Or maybe they are not ready or competent to handle this task with good faith. It probably would be much better if they just stayed aside and dedicated their energy into traditional finance, stock markets, and banks. In other words, if there is no value that can be added by the actions of the agency, inaction maybe preferable in order not to do more harm. What if the goal of such tactics is to do harm to crypto. We can only guess. If only they could be more transparent and move towards more clarity.
Gensler may seem to be the bad guy, and congress people may have shown some level understanding in crypto and let their concerns be heard publicly. However, when it comes to lack of clarity, Congress itself is more responsible than any government agency. It is within the power of Congress to introduce laws that create a regulatory frameworks and remove confusion from the equation. Over the years, Congress has demonstrated that they are incompetent in true problem solving skills. The purpose of public hearings like this usually to hold government agencies accountable, but also gain more knowledge regarding certain issues, so that Congress can come up with proper plans to find solutions in an educated manner.
I would think tackling the crypto issue would be the easiest for Congress. We all know Congress is unable to act fast and unwilling to reach compromises with opposing party's elected officials. But this normally applies to issues that parties have completely opposite views on. I don't believe crypto is among the issue that both parties have opposing views. Representatives and senators from both parties are all over the place regarding crypto. Some are very hostile, some are friendly, other have no clue. But none do so due to their loyalties to one party or the other. Ultimately, it is legislative branch that is responsible to make laws that are beneficial and provide solutions to new potential problems. It is a big problem that there is no legal clarity about bitcoin and crypto. This allows fraud to spread, and government agencies overstep their boundaries.
In fact, crypto is not a problem. SEC is, Congress is. Crypto would do just fine on its own. It doesn't need Congress or regulators to intervene or take actions just for the sake of appearing to be doing something. It has become very clear that their research and investigations have no results when it comes to actually protecting the investors. They failed to see the collapse of TerraLuna, they failed to see massive fraud in FTX, they had no clue about Silicon Valley Bank, etc. That is not to say they should have been on top of their game and prevented these events from happening. Better option is always to just stay away. Decentralized solutions do not need centralized regulations.
Crypto has been politicized. It is understandable it would be, because decentralized solutions like bitcoin pose a threat to status quo of financial systems and USD itself. Loss of trust in the fiat and banking system will drive masses to bitcoin and crypto by design. I am not in favor of USD losing its value or status. I believe both USD and crypto can coexist. However, when politicians think crypto poses threat to USD, they tend to create more confusion and come up with weird ways of attacking crypto. There are so many problems that need attention and solving. Crypto should be least of their concerns. They can't do anything about it anyway. We haven't seen anything good so far.
Politicians focusing their attention to crypto in a way how to figure out ways to control and regulate the space is not unique to the US, it is a global phenomenon. Very strange one too. Recently, it was reported that G20 was planning to address the issue of crypto and come up with a global plan for countries to follow. Why are they so concerned about crypto in G20 or international levels, makes zero sense. Why can't they understand that they don't add any value to bitcoin or crypto. By such statements and agendas these politicians once again demonstrate that they are not interested in solving real problems.
The good news of decentralized systems is, not only centralized governments are capable of shutting them down, they simply don't understand what they are dealing with. Some of them may take these decentralized systems like bitcoin monetary network as the enemies and something bad. When in reality bitcoin network doesn't have any political position, doesn't care about old or new systems. It has one function, and does it well.
There are also countries who slowly are realizing the benefits of being involved in bitcoin and crypto in one way or the other. El Salvador is a pioneer and will be remembered as the first countries who took the brave step of normalizing bitcoin in country level. There are other countries, while don't speak loudly about bitcoin and crypto, do see benefits as well and secretly participate in the decentralized networks by accumulating bitcoins and crypto. You may have read in the news that Bhutan has been investing in bitcoin without making any announcements.
Based on court records, Bhutan’s $2.9 billion national investment arm, Druk Holding & Investments, was a client of insolvent crypto lenders BlockFi and Celsius, according to documents revealed in a Forbes report on April 15.
It makes perfect sense for any country to accumulate some bitcoin at least as a hedge. There are many other ways countries can invest and participate in bitcoin and crypto that is beneficial to the country and its citizens. Anybody is welcome in open decentralized networks.
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