‘Surgical removal’ of Crypto Will Only Weaken USD Dominance, Commentators Say

The US crackdown on cryptocurrencies and corporations would only hinder crypto-related innovation and “weaken” the country, according to industry commentators following Coinbase’s latest Wells warning.

Coinbase is the latest crypto business to receive a “legal threat” – in the form of a Wells notice — on March 22, just a month after stablecoin maker Paxos received its own in February. Some speculate that there may be more to come. Mati Greenspan, CEO of crypto research firm Quantum Economics, believes US regulators have been anti-crypto “from the beginning.”

The recent failures of crypto and startup-friendly banks such as Silvergate, Silicon Valley Bank (SVB), and Signature Bank have been interpreted by some as part of a regulator-led plot to de-bank the crypto industry called “Operation Choke Point 2.0.”

Meanwhile, the White House’s March 20 economic report debunked the “touted” benefits of crypto assets, devoting nearly an entire chapter to discrediting them.

Greenspan told Cointelegraph that the suspected move could be ongoing because cryptocurrency is perceived as a “threat” to the US dollar’s supremacy in global trade – a significant and long-standing benefit to the US.

But, as more people begin to utilize cryptocurrency for cross-border transfers around the world, he warned that a crackdown on cryptocurrency in the United States might have the reverse effect on the dollar:

“Surgically removing cryptocurrencies from the US financial system will only further isolate the US and diminish the dollar’s position as the global reserve currency.”

According to Adrian Przelozny, CEO of crypto exchange Independent Reserve, the recent banking sector difficulties were not caused by “any failure in crypto,” but rather by banks handling their risks in a “irresponsible” manner. “The White House would be better positioned to scrutinize banking industry practices,” he continued.

In response to the most recent action against Coinbase, Przelozny stated that the “adversarial atmosphere for the crypto business” in the United States will drive “jobs, investment, and future innovation” offshore. “Singapore, Hong Kong, and potentially Australia” may offer a better home for the business, and those nations “will receive the economic benefits,” Przelozny added. The precise grounds for the regulator’s targeting of Coinbase remain unknown. The SEC has refused to comment on the situation.

“This is a curious attitude to adopt since the losses many incurred in the last year resulted from catastrophes involving uncontrolled offshore constructions,” said Michael Bacina, a lawyer and partner at Piper Alderman. According to Bacina, the sector has been asking for clarity on how to comply for years. He cited the judge’s recent “telling” comments in Voyager Digital’s bankruptcy case, in which he “recognized that there is no clear advice from regulators.”

He went on to say that until governments lay out a road to regulatory compliance, offshore jurisdictions will continue to house cryptocurrency enterprises, “costing employment and raising the risk for consumers and investors.”