Cryptocurrencies are no longer untouchable. The conviction of the king of crypto, Sam Bankman-Fried, for a fraud of 10,000 million dollars (9,400 million euros), is a vigorous endorsement of the aggressive action that the two agencies that have jurisdiction to regulate these assets, the CFTC and The SEC, are proving under the presidency of Joe Biden to regulate the chaotic world of virtual currencies.
In particular, the president of the SEC, Gary Gensler, has flagged the control of the crypto world, which moves more than a trillion dollars, and the Bankman-Fried disaster, of its virtual currency market FTX, and of its hedge fund Alamenda Research, gives him the wings to continue in the same direction. Gensler also has a tremendous advantage in relation to other cases of financial asset regulation, since the US Congress does not seem to have much interest in issuing legislation for cryptocurrencies. This leaves supervisors free to set the rules under which these assets can operate, without having to wait for the Legislature to create laws, something that can easily take years. Binance – the world’s largest cryptocurrency exchange – is locked in a legal fight with the SEC, which claims that it is a capital market like any other and should therefore be subject to sector regulation. Coinbase, another similar exchange, has also been sued by regulators for the same reason.
The political climate in Washington has thus changed from the need to promote cryptocurrencies to that of regulating them, in part because legislators now have much more pressing – and complex – issues to focus on, especially Artificial Intelligence (AI). which, as has been demonstrated to date, is something that virtually none of them understand at all. In fact, one of the initiatives of the Democratic majority leader of the Senate, Chuck Schumer, has been to launch a series of seminars for senators in which AI leaders explain to them what this technology is about.
The defense of the sector is the usual one in these cases: Bankman-Fried has been an isolated case, which cannot tarnish the image of the entire sector. But the fact that virtual currencies and the markets in which they are exchanged have not served as a refuge from the tightening of monetary policy, as their defenders advocated, but rather have revealed themselves as risk assets that have made them first to fall has taken away the strength of their arguments. The financial sector already has enough elements of instability of its own to add one more whose benefits in terms of liquidity also do not appear anywhere, despite the enthusiasm of its defenders. Even the geopolitical reality has added to the storm that crypto is suffering, after the Russian invasion of Ukraine and the Hamas attacks in Israel have revealed the role of cryptocurrencies in the financing of terrorist groups, cyberattacks, and crime. organized.
