Mt. Gox has again delayed its planned repayment schedule, with the new deadline being pushed back a year to Oct. 31, 2024. The prominent crypto exchange was first hacked in 2014 and ultimate lost an estimated 850,000 bitcoin (~$23 billion today), meaning that creditors have been waiting nearly a decade for relief. Some analysts, including those at UBS, have warned the Mt. Gox repayments could cause an increase in BTC's active supply, leading to price weakness.
Fat Fingers
Alameda Research was behind the hiccup that caused bitcoin prices to temporarily drop over 87% in 2021, according to an ex-employee. On Oct. 21, Binance.US saw bitcoin plunge from $65,760 to as low as $8,200 within minutes, with no apparent reason, while other bitcoin markets operated normally. A Binance.US spokesperson said at the time the crash was due to a bug in the trading systems of one of their “institutional traders.” According to Baradwaj, a former employee at Sam Bankman-Fried's hedge fund, Alameda lost millions of dollars after a trader misplaced a decimal point while manually inputting a trade and "selling bitcoin for pennies on the dollar."
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Decentralized, so Dead?
A Binance executive warned on Thursday newly passed European Union rules could lead to large-scale delisting of stablecoins. Lawyers are still deciphering the implications of the EU's Markets in Crypto Assets (MiCA) regulation and the gray areas in how the landmark law will apply to decentralized and foreign issuers. Binance isn't alone, partner at law firm Latham & Watkins Thomas Vogel said: “A lot of the stablecoin issuers will be, or will purport to be, completely decentralized, therefore without any point of decision or issuance” and unable to meet MiCA strictures. Meanwhile, the House Financial Services Committee is sending another crypto-related bill to the floor, this time legislation meant to head off a U.S. CBDC.
The Takeaway: Political Concerns?
Vivek Ramaswamy is the latest presidential hopeful with an appeal for the crypto class. Speaking at Mainnet, the New York City-based crypto conference put on by Messari, the breakout Republican candidate said he will soon announce a “comprehensive crypto policy framework” meant to address current gaps in regulation.
And so he may, the mandate is reportedly about three-quarters complete. And if the plans are as “serious” and “thoughtful” as promised, may Ramaswamy’s policies serve as a guiding light for those already in or seeking power. There’s a reason he’s known as the right’s answer to Sen. Liz Warren (it has nothing to do with his Indian heritage), and a little wonkism might benefit blockchain’s chances on The Hill.
But let this “announcement of an announcement” also serve as a moment for crypto to consider who it's willing to crawl into bed with. While some industry insiders, like Messari CEO Ryan Selkis, who interviewed Ramaswamy in a fireside chat, consider themselves “single-issue voters” primarily concerned with government interference in the blockchain industry, let’s not decide this nation’s top executive based solely on whether he or she like Bitcoin.
In fact, let’s not vote for or against any political candidate based on their stated views on crypto. There are more important things in the world beyond the fate of stablecoin regulation. And, being honest, it’s hard not to see the politicization of crypto as anything but rhetoric. There is no one who can be voted into office who will make Uniswap run better or worse, or be able to derail Bitcoin.
On a practical level, thinking about crypto politically is almost certainly a waste of time. And more importantly, once you start basing decisions around what the government will allow in reference to crypto, the game is lost.
I’m saying this at a time when the sitting U.S. President has more or less declared war on crypto, and when the nation’s top regulators are circling the pack routinely picking off choice targets one-by-one. I know there are legal threats to crypto’s existence in the U.S., and real implications of regulatory indecision. Developers shouldn’t fear prison simply for publishing code.
But engaging in the political process as a means of ensuring crypto’s future is to miss the point of crypto so hard it’s almost embarrassing to have to write this column. Crypto doesn’t need political support – it just needs to be built in a way that rises above politics.
This isn’t even an ideological argument, it’s the practical reality of blockchain as we know it.
Projects that rely on staying in the good graces of regulators, executives and judges should be assumed dead (in the same way a vulnerability in code *should* be exploited). There’s a reason why Bitcoin has stayed around, yet projects like LBRY have been wiped off the map: if a project has a vulnerability, it will be exploited. And all crypto projects are exposed to the vagaries of the law.
The Biden administration has undoubtedly been tough on crypto, but there is no reason some future president won’t be worse. Gary Gensler was expected to be pro-crypto, and look at how that turned out. If blockchains are truly meant to sustain themselves for centuries, why expose them at all to four-year election cycles?
I am not going to say that the work of elected politicians like Sens. Cynthia Lummis and Kirsten Gillbrand – who are advancing some of the most pro-crypto legislation to date – isn’t appreciated, or that Rep. Tom Emmer (R-Minnesota) isn’t a true believer in crypto. Lobbyists at the Blockchain Association have argued the short-term success of crypto will be determined by getting pro-crypto butts in seats.
However, there is no telling whether pro-crypto politicians or regulations won’t do even more damage than crypto’s critics and antagonists – like the negative impact that “megadonor” Sam Bankman-Fried’s preferred set of rules would have had by protecting his likely fraudulent exchange FTX. At least crypto’s enemies help crypto cut its teeth.
Lastly, crypto already has its political platform sorted out, whether you call it libertarianism, “classical liberalism” or crypto-anarchy: universally accessible platforms, built privately. It’s why crypto appeals to progressives who argue for expansive government programs that are not means-tested as well as conservatives who think freer markets means freer people.
There are a lot of politicians who cynically want to affiliate themselves with that ultra-liberalism, without doing the work of thinking through what it might mean for their other political concerns. I think this is a phenomenon primarily on (but not necessarily always going to be limited to) “the right,” which has pols like Ted Cruz and Ron DeSantis tilting at the windmills of non-existent CBDCs.
It’s telling that the MAGA-aligned Ramaswamy is willing to break with Trump over the Donald’s unerring support of the U.S. dollar. Many bitcoiners are deep-pocketed, and think problems can be solved by throwing money at it. But isn’t it a little sad that all Ramaswamy had to do was announce an unfinished set of rules and make fun of the “alphabet soup” of federal regulators to emerge as one of the most “pro-crypto pols” in the field?
The saying is “cypherpunks code.” Try to remember.
Phemex, a centralized exchange making moves to partially decentralize, is celebrating Bitcoin’s 15th anniversary by placing a big bet: If the bellwether token is worth $50,000 or more on October 31st, the exchange will pay out 1,000 BTC to Phemex Soul Pass holders. To do the easy math, that’s $50 million. Sure, it’s unlikely that BTC’s dollar-denominated value will double in the short term – but would you bet that much that it won’t?
In the more likely scenario that BTC stays in its current $25,000 to $30,000 trading range – where it has been, given a little leeway, since March – Phemex is still giving away 1 BTC. Continue Reading
