Daily News

Ep 12: The crypto rebellion

Posted by Finterest on

What’s going on here?

The history: American history is filled with rebellion against dominating government:

  • Tax-weary colonists throwing tea into Boston harbor; or
  • The Reagan Revolution where voters demanded a rest from regulation in 1981.

Today: Leading figures in the cryptocurrency industry are at a breaking point of their own, issuing a collective protest against the SEC (Securities and Exchange Commission).

Cryptocurrency is a digital asset working as a medium of exchange that uses strong cryptography to:
- secure financial transactions;
- control the creation of additional units; and
- verify the transfer of assets. (Greenberg. A. (2011) "Crypto Currency". Forbes.com.)

How did it happen?

The 1st outburst:

  • Came from Circle (the Boston-based exchange which has been boasted about having good relations with regulators by its CEO).
  • A Circle blog post
    • criticized the SEC harshly for its confusing legal tests; and
    • accused the agency of changing the criterion in its transactions with the crypto industry.

The next outburst:

  • Kik (the Canadian messaging service turned crypto giant) launched a project called Defend Crypto to make a legal stand against the SEC.
  • Wilson (a Kik board member & longtime crypto champion) was angry with the SEC’s overreach: “Image if a user had to go to a securities brokerage firm like Schwab to purchase a token in order to be able to use Apple’s App Store.”

The big picture

What’s different this time?

  • Crypto folks have expressed protest against the government for years (the founding of Bitcoin itself was very much a declaration of independence.)
  • The difference this time is that the protest is led by people who have long shown patience and compliance with the feds.
  • Their fears include the U.S. losing the crypto lead to other countries.

What’s the prospect?

  • The difference doesn’t mean they will succeed;
  • The “Defend Crypto” strategy (pressuring the SEC and bringing about relief from Congress) is a difficult battle; some say the protests are misguided;
  • Some experts commented against the protest:
    • Berkeley academic Nicholas Weaver says the SEC’s test for securities is just fine when it comes to crypto;
    • Lawyer Preston Byrne was more sarcastic: “Don’t take legal advice from VCs”, “What’s best for entrepreneurs may not be what’s best for preferred shareholders.”
  • It’s too soon to say how the crypto rebellion of 2019 will turn out; for the industry’s sake, let’s hope Kik and Circle know what they’re doing.
Content source: Roberts. J. J. (2019) "The crypto rebellion". Fortune the ledger. Available from: http://fortune.com/2019/06/03/the-ledger-the-crypto-rebellion-mastercard-moxie-as-coinbase-turns [Accessed Jun 7 2019]

Leave a comment