We already know that America is different. Different healthcare systems, different gun laws, different work ethics, different measurements, and different cell phone standards … of course countries differ from each other.
But these days the US doesn’t seem like another country with slightly odd idiosyncrasies, but much like another planet altogether.
America isn’t just another country. It’s another planet.
It has been evident for a while that the world is heading toward George Orwell’s 1984 scenario with three superstates, at least two of them totalitarian. I’m based in Airstrip One, which used to be part of Oceania, and which isn’t all that bad.
The world has been divided into three big spheres of influence: China, Europe, and the US. (Pardon me for ignoring the Middle East and India for a moment. In the financial world, these three have always had their differences, someone reconciled by centralized players and international treaties. They had their centers of power: Hong Kong, London, New York. They got along fairly well in the age of globalization.
But in crypto, the differences couldn’t be starker.
Europe is looking toward informed discussion and discourse in an effort to embrace this new technology of #blockchain and its benefits for all sorts of industries. Its efforts are not always well-informed, and the proposed measures are not always feasible. Banning unhosted wallets was once on the table, as was reporting of every blockchain transaction — both impossible to do. But through a diligent, treacly consultative process, a regulatory framework seems to emerge that bureaucrats in Brussels want to be the basis for a global standard.
Good luck with that! Just as the three superpowers in Orwell’s dystopian vision are permanently at each other’s throats, efforts to coordinate crypto regulation on a global scale haven’t gone anywhere. Last week another cross-Atlantic working group was unceremoniously abanded.
Last week also, the chairman of the House Financial Services Committee #HFSChinted that one could hold a hearing and grill the chairman of the SEC for not doing its job. The US Chamber of Commerce also called out Mr. Gensler’s agency for failing to provide proper guidelines, let alone regulation.
While in Europe the way to #MiCA is fairly well structured and surprisingly transparent, America’s current situation resembles the murky swamp on which the city of Washington was actually built. After speaking to several law experts in the last few weeks, I have come to one conclusion:
Absolutely nobody knows what’s going on.
Crypto America isn’t another country, its a different planet. A strange and hostile planet. We, the people of Cryptonia, landed there, and built colonies, but ultimately decided this planet was uninhabitable.
Every crypto service provider I am aware of has made contingency plans. Some prefer the sandy beaches of Bermuda, others want to return to the home planet. Others yet yearn for the deserts of Arabia, where the local sheiks throw money at crypto service providers and blockchain companies with the aim of becoming a Crypto Mecca. After the last MiCA version was approved in Parliament, France made it very clear that La Defense would welcome with open arms the colonists who were ready to abandon the hostile new planet.
And hostile is the right word. In the aftermath of FTX last year, Washington, greatly embarrassed, has only one thought: how to prevent this from happening ever again. That seems to be the general approach in US law making. Wait for the scandal, punish the culprits, then make some haphazard, ill-conceived laws so that “next time is different”. It never is.
This time round, the powers that be have found one solution: destroy the rebels and hand over the new tech to the people they trust.
The US seems to have made up its mind that the technology of blockchain must not interfere with the status quo. It must not take power away from the corporations whose lobbyists know their way around Washington all too well.
But what Mr. Gensler, the villain of the play, is really doing, is playing the waiting game.
This week too, the Fed announced that FedNow, its new service for depository institutions, which is to launch in July, will work with a government approved, fully compliant blockchain no one has ever heard of. On Wall Street too, most of the cooperations with blockchain and DLT projects I observe do not involve a single project the crypto “community” would be familiar with.
It’s straight out of China’s totalitarian playbook: ban everything and replace it with the Party version. The eCNY isn’t as much a financial tool as a control too. Orwell was definitely only something.
Mr. Gensler is not in a hurry. He is waiting for everything to fall into place, and everyone to fall in line; he is waiting for all the existing banks to get their piece of the pie, until every home-grown blockchain solution, fully KYC/AML compliant of course, has firmly established itself. Helps if you have swamp-dwelling friends, of course.
America hates not being in charge. The word “decentralized” isn’t just blasphemy in Washington, it’s heresy. The whole idea of Washington is specifically to be the “center”.
Blockchains whose owners are not known, and blockchains whose actors are outside US jurisdictions, are a no-go. Distributed ledger technology is fine, but no “distribution” outside the reach of American laws. The Secret Service is watching.
To those of us who understand blockchain, this is ludicrous. To those in power, it is self-evident. The new planet is still trying to find its propwer government, and for all intents and purposes, it will be a totalitarian one. Washington is copying Beijing.
Much of this involves the Secret Service and the FBI. Just as the discovery of NFTs used for human trafficking and the funding of Ukraine through crypto alerted European authorities to the dangers of blockchain, hundreds of investigations involving criminal activities using crypto conducted by the Federal Bureau of Investigation helped shape America’s current stance. It was allegedly the FBI director who warned the Biden administration that crypto was a threat to national security, one of my interlocutors said. “You can’t fight a war in Ukraine and be undermined by crypto-financed adversaries. This is as much a war on crypto as it is a war on ‘America’s enemies.”
She went on to say “You see, it’s not really Gensler’s decision. All government agencies have been told by the FBI to prioritize the creation of a fully compliant, supervisable, HOME-GROWN blockchain infrastructure before concerning themselves with the crazy world of crypto.”
If that sounds like the approach a totalitarian regime would take, then that’s what it is. The Empire of America isn’t out to destroy crypto, it’s out to preserve its hegemony. It’s called “keeping citizens safe”, or “protecting consumers”, in Orwellian Newspeak.
So, while the rebel forces on Planet USA battle the Empire, the crypto colonists we left behind are desperately trying to find their new Luke Skywalker, very true to their pop culture ideals.
For the XRP fans, it is Brad Garlinghouse who should lead the rebellion. For the Tribe of Doges it is Mr. Musk, who got us to this new planet in the first place with his awesome rockets. It’s Stacy Warden for the Algo people, Vitalik for the Etherati and for the Koinos cult it is Andrew Levine … the list is endless Every clan has its candidate, and every house its master.
Make no mistake: the situation in America isn’t just ridiculous, it’s dangerous. A wall is building against the benefits of decentralized technology. The way Washington understands decentralization is very different form the way blockchain researchers look at it. “For the folks in DC, there must be someone in charge who runs the … whatever decentralized network,” one interviewee noted.
So there you go. This is not about coordination approaches of different jurisdictions. This is enlightened rule-making on one hand, and a Star Wars like fight against the evil empire. Gary Gensler probably thinks he is Darth Vader
While the new planet is still terraforming, the search for a leader of the rebellion is on. Whoever you are, from whichever block space or side chain you shall emerge:
May the Force Be With You!
The Blockchain Futurist 