Would You like a feature Interview?
All Interviews are 100% FREE of Charge
Promoting financial inclusion is one of cryptocurrency’s strongest value propositions. Ironically, however, the banking crisis has effectively rendered the cryptocurrency industry itself a non-bank, at least in the United States.
Things at Silvergate, Silicon Valley Bank, and Signature (three crypto-friendly U.S. banks) smell like what Nick Carter called “Operation Chokepoint 2.0.” While this claim has plenty of merit, deniers are spreading the conspiracy theory claims in a very harsh tone.
For example, Signature never faced a bank run. Yet the Federal Deposit Insurance Corporation quickly took over the bank. An anonymous source even claimed that the FDIC claimed that buyers “must agree to abandon all cryptocurrency business,” but the FDIC backtracked on that claim.
I don’t want to warn you, but since the beginning of the year there has been a new Operation Chokepoint type of operation targeting the US crypto space.This is a well-orchestrated effort to alienate the industry and disconnect it from the banking system, and it is working.
— Nick Carter (@nic__carter) February 7, 2023
Cryptocurrencies are not only resilient, but they also have the tools to fight back by leveraging stablecoins to minimize reliance on banks. It can not only solve the immediate crisis, but also provide the ground for establishing cryptocurrencies as a self-sufficient parallel financial system. After all, that was Satoshi’s vision.
US regulators are shooting themselves in the leg
There is a reason why most regulators, with the exception of some progressive jurisdictions, are going all out on cryptocurrencies. Their power is based on toxic relationships between governments, money printers, big business, and oligopolies masquerading as the banking system. The unbroken, permissionless, autonomous system that cryptocurrencies enable threatens this anti-personal connection to its core.
Our journey to a fairer, more personal cryptocurrency world has never been easier. The extremely aggressive regulatory response is also largely in line with expectations. Yet for some reason, US authorities in particular seem oblivious to the self-destructive nature of their actions.
Related: Did regulators deliberately cause installation installations?
Technological advances have been essential to the United States’ current dominance in global geopolitics.Emerging Crypto-Based Technologies Enable the Next Possibilities giant leap in this direction. And if regulators can overcome their greed for short-term power and control, we will see how repressive innovation is not in their interest.
For example, the ongoing banking crisis, largely due to misguided policy actions and selective enforcement, is ultimately hurting financial stability in the United States. Moreover, if this is indeed a coordinated effort to de-bank the crypto industry, the average US taxpayer will bear most of the brunt, albeit staying within legal limits. It means that
Some projects have found scalable ways to help cryptocurrency companies become regulated entities. Archblock is accepting US-based community banks to expand on-chain “real-world asset” lending for regulated institutions.
While this approach may ultimately resolve some of the regulatory woes, a sizeable portion of the global cryptocurrency community favors more drastic solutions.
Crypto companies don’t need banks if they have stablecoins
Since Terra’s “algorithmic” coin TerraUSD (renamed TerraClassicUSD) crashed last year, the stablecoin has come under a lot of scrutiny, some of which sparked a chain of events that led to the FTX debacle. The crash wiped out his $40 billion worth of ecosystem, but also provided valuable lessons in due diligence, overexposure and risk management.
Things like Operation Chokepoint 2.0, real or hypothetical, are possible because cryptocurrency companies and investors are using banks as an entry point or an exit point. There are practical reasons for this choice. For example, cryptocurrencies cannot be purchased with cash and must be paid in US dollars from a bank account. Even if you use an exchange, you still need a bank transfer to deposit fiat currency.
Related: The world could face a bleak future because of CBDC
However, the bank need not be so involved. Stablecoins can provide fiat tokenization services that crypto companies rely on banks with a lot of risk and despair. This process is not decentralized, but neither is banking. It is not decentralized here as the goal is to connect centralized and decentralized finance while minimizing counterparty risk.
Former BitMEX CEO Arthur Hayes Releases Rich Information blog In March, he provided detailed examples of choosing stablecoins over banks. Most importantly, he proposed a revolutionary stablecoin model he called the Satoshi Nakamoto Dollar or Naka Dollar (NUSD). The idea is to leverage Bitcoin (BTC) and reverse perpetual swaps so that banks are not involved in the NUSD issuance and redemption process.
Proposals like NUSD demonstrate our collective willingness to fight back in the face of regulatory uncertainty and aggressive attacks. As cryptocurrencies evolve, the attack surface will decrease for regulators and more robust alternatives to legacy systems will emerge.
Innovation is not just a business model, it is our greatest strength. And it is through innovation that cryptocurrencies can overcome all hurdles. The show must go on because future generations should be given a better world.
Sarah Austin is the co-founder of QGlobe Games, a Steam-model cryptocurrency gaming platform. She was the founding CMO of Kava Labs, the founding CEO of Pop17.com, and she was Twitch’s first community builder. She graduated from Dominican University in California, and John earned her data science certification from Hopkins University.
This article is for general informational purposes and is not intended, nor should it be taken as legal or investment advice. The views, thoughts and opinions expressed herein are those of the author alone and do not necessarily reflect or represent the views or opinions of Cointelegraph.