Cryptocurrency has been a hotly debated topic for years now, with some hailing it as the future of finance and others viewing it as a dangerous threat. As the pro- and anti-cryptocurrency groups continue to battle it out, it is worth examining both sides of the argument, or rather, both sides of the “coin”. Pun intended.
As with all things, there will always be two major factions ─ one for and one against. For instance, perhaps you are a fervent believer in keeping your cold hard cash with you physically, or you belong to the category who much rather dump those banknotes and lose change in the bank. The same can be said for crypto ─ those who are for it and those who are against it.
For the pro-crypto group, proponents argue that crypto offers numerous advantages over traditional forms of finance. For one, it allows for greater anonymity and privacy in financial transactions. In addition, crypto offers faster and cheaper transaction processing, as it is not subject to the same regulations and fees as traditional banking systems.
However, the opposite can be said for those against crypto. They argue that the above-mentioned advantages come at a high cost. One of the biggest concerns with crypto is its association with illicit activities, such as money laundering, drug trafficking, and terrorist financing. Because of its anonymous nature, it can be difficult for law enforcement agencies to track down perpetrators of these crimes. On top of that, crypto is highly volatile, with its value often fluctuating wildly in a matter of days or even hours. This can make it a risky investment and can contribute to financial instability.
During a panel just last Friday at Consensus 2023 held in Austin, Texas, Blockchain Association CEO Kristin Smith pointed out that the crypto sector is “absolutely at war” against policy and lawmakers in the United States, particularly against Senator Elizabeth Warren, and Securities and Exchange Commission (SEC) Chairman Gary Gensler.
Warren is one of the strongest adversaries of crypto and it seems like she is on a crusade to end it. Smith also said, “Elizabeth Warren has an anti-crypto army. She is advertising on Twitter for her campaign, that she has an anti-crypto army.”
Last December, in one of her attempts to ban crypto, in a way, Warren authored a bill requiring crypto wallet providers to comply with bank Anti-Money Laundering rules. This means that anyone who designs a crypto wallet register as a money services business, essentially be regulated like a financial institution. Under the false guise of a pro-national security bill, it is a “Trojan horse designed to destroy the crypto markets”. CoinDesk labelled it “a smart strategy” and it is to “convince national security conservatives that this is an answer to a perceived problem, particularly members with little background knowledge of how crypto works, and then let crypto development die off.”
Another crypto naysayer is the author of a recent article titled “The Case for Banning Crypto” American University professor Hilary Allen. On top of engaging the media, her and her peers’ stance is that crypto does more harm than good while conversing with federal agencies. Crypto is an industry that supports a large chunk of jobs, not just in the US but all over the globe, and banning crypto entirely is not only unrealistic and impractical, it is simply the wrong policy.
In actuality, many in Congress are in favor of embracing and regulating crypto. It can be said that the number seeking to regulate crypto seriously outnumber those advocating for an outright ban. The White House has also written that it seeks to work with Congress to not ban crypto but to regulate it. Crypto is after all a nascent industry and many countries are competing to be the go-to crypto hub after seeing the advantages of embracing it.
Another in the anti-crypto army is the famous or infamous Gary Gensler, the US SEC chair, as we all know too well. The SEC’s enforcement action against numerous digital asset companies like Paxos, Kraken, Genesis, Gemini, and the like, came under fire from Representative Patrick McHenry recently at a hearing at the US House of Representatives Financial Services Committee. It was with regards to Gensler’s leadership of the regulatory agency, with one of the cases being the SEC’s perceived overreach and approach of regulation through enforcement.
The SEC has an imposing track record of 50 separate enforcement actions against digital asset companies, and McHenry blamed Gensler for the “nonsensical” punishment of crypto companies which failed to comply with laws they did not know even applied to them.
Smith gave her reassurance at the panel during Consensus 2023, saying that a pro-crypto “army”, including the Blockchain Association, is fighting “in Washington every day” for the industry. “So we’re fighting. I don’t think this is a war that lasts forever, but we’re going to probably be at war for the next 18 to 20 months,” she continued.
As much as banning crypto could reduce its association with criminal activities and provide more stability to the financial system, it will stifle innovation and limit the privacy and anonymity that some users rely on. Regulating crypto, on the other hand, could allow for greater oversight and prevent its use in illegal activities, while still allowing for the benefits that it offers. A legislative framework needs to be passed that is above the level of the SEC, and it is up to policymakers and industry leaders to make informed decisions that balance innovation, privacy, and security.
