Why the United States will not ban cryptocurrencies
Editor’s Note: Today, our resident cryptocurrency expert Eric Wade returns to debunk a pervasive myth. In this room – which he recently shared in the Stansberry Digest, adapted from a June 18 Crypto capital update – he explains why the United States will realize that they cannot regulate cryptos … plus, he explains why the decentralized finance revolution is bigger than a committee …
Crypto regulation is coming …
In recent months, China has banned crypto mining operations and ordered major banks not to do business with crypto companies. Germany’s Federal Financial Supervisory Authority, known as “BaFin”, has announced that it will regulate alternative investment funds that wish to invest in digital assets such as cryptocurrencies. And the South Korean Ministry of Strategy and Finance is launching tax rules and regulations for crypto transactions from 2022.
This is in addition to the recent statement by the UK Financial Conduct Authority that will clamp down on Binance activities in the UK.
All of this regulation may seem like a death blow to cryptocurrencies … but it’s actually a good thing.
Let me explain …
Several countries, including Nigeria, India, Ireland, Thailand and the United States, have all recently made headlines with their thoughts on the regulation of crypto.
To begin with, Swedish Financial Markets Minister Ã sa Lindhagen expressed the need for cross-border coordination of regulatory efforts. The comments come as Sweden continues to develop its own central bank digital currency (“CBDC”) called e-krona.
The European Union has set 2024 as the goal of a “global framework for the adoption of distributed ledger technology (” DLT “) and cryptoassets in the financial sector”.
India’s central bank also released a statement reversing warnings from local private banks warning their users against buying and using cryptocurrencies. Those warning messages cited an outdated three-year ban on crypto trading, which the Indian Supreme Court overturned in March 2020.
These actions come amid rumors of a blanket ban by the Indian government, which may or may not have real weight behind it.
And Nigeria recently rolled back its previous bitcoin ban, which most of the country seemed to ignore anyway. About 32% of Nigerians are said to use crypto, compared to 6% of Americans. Many believed that a reversal of Nigeria’s ban was inevitable.
Meanwhile, financial regulators in the United States are concerned about the volatility of cryptocurrencies and the growing need for a clear regulatory framework.
That’s why the United States House Committee on Financial Services has created a Digital Assets Task Force. This group plans to examine how to approach digital assets, digital currencies, blockchains and cryptocurrencies in the United States.
You see, one of the issues we’ve had in the United States is whether cryptocurrencies can be labeled as goods, assets, or currencies. This affects taxable income and capital gains.
Now, I don’t expect this group to come up with definitive answers on how to regulate cryptocurrencies. But I think it creates a learning path. I imagine the group brings in all kinds of smart advisers … and they’re going to have a conversation where somebody says, “So you’re telling me nobody’s in charge?” be in charge and sort out some of these rules? “
I already said that … the United States cannot regulate cryptocurrencies. The United States can only regulate Americans. So the next step would be for someone to say, “You can’t regulate and control purely decentralized cryptocurrencies like bitcoin.”
The United States Securities and Exchange Commission (“SEC”) has previously stated that it does not view bitcoin as a security because it is decentralized. There is no regulatory body issuing new shares … so the SEC is not concerned with bitcoin. But there are other coins and tokens that we can expect to be treated very differently if they appear to have features of securities.
Hopefully the United States House Committee on Financial Services will realize that it cannot be in charge of certain coins due to certain characteristics. If he doesn’t realize this and tries to control decentralized coins like bitcoin, he will realize at some point that bitcoin and decentralization are more important than the committee.
It’s a bold statement, I know. But think about it …
Bitcoin is global … it is not controlled by the jurisdiction of any particular country … and the mining nodes and equipment that keep the bitcoin network running are located all over the world. This equipment can move away from unfavorable countries, which is what we are currently seeing as crypto miners leave China. If China can’t stop bitcoin, it makes sense that no one can.
Now, there are crypto organizations that are not fully decentralized. For example, Binance, the largest crypto exchange by volume, has had to relocate several times due to regulatory crackdowns. That’s why it’s important for projects to seek out crypto-friendly jurisdictions like the Cayman Islands, Singapore, or others.
In short, the United States House Committee on Financial Services has some leeway to regulate crypto projects that are not fully decentralized. But for purely decentralized coins like bitcoin?
It is impossible for a government to shut down truly decentralized cryptocurrencies because there is no single point of weakness to attack. And in the meantime, the growing regulation of cryptos shows that they are gaining more and more recognition around the world.
As more and more people recognize crypto as a legitimate asset class, so much capital will flow into the space that picking the winners will be like shooting fish in a barrel.
Editor’s Note: Eric has identified an emerging story in the crypto space that goes far beyond bitcoin. This could help investors generate returns as high as 10% … 20% … even 35% … while capturing the huge potential of cryptocurrencies with much less risk. You can still get the details for a short time here.
It might sound crazy, but cryptocurrency investors are willing to hold on – and even buy more – despite all the recent volatility. This is because cryptos are unlike any other asset class in the market … Learn more about what sets them apart here: The “lightning in a bottle” that makes cryptos unstoppable.
It could look like cryptocurrencies are heading for another big crash. But Eric says the “speculative frenzy” has already led to something much more powerful. And that could mean sky-high prices for cryptos … Get the full story here: Why I expect crypto prices to go up from here.
TRIPLE-DIGIT GAINS AT THE HEART OF âTHE RETAIL APOCALYPSEâ
Today we are checking out a business that survives the ‘retail death’ …
Regular readers know that e-commerce companies like Amazon (AMZN) have changed the way we shop. And many traditional retailers are struggling to keep up. But some companies have found ways to stay relevant. Take today’s business, for example …
L Brands (LB) owns the renowned Bath & Body Works and Victoria’s Secret retail stores, with nearly 2,700 stores in North America and several other countries. Many shopping centers fail, but by improving its e-commerce business and skillfully responding to the demands of its specific customer base, L Brands has built customer loyalty. Sales reached $ 2.4 billion in the last quarter … 12% more than the corresponding period in 2019 before the pandemic.
LB’s actions struggled at the start of the COVID-19 pandemic when many non-essential retailers had to shut down. But they have exploded more than 700% more since their 2020 lows and have just hit a new multi-year high. As long as L Brands continues to adapt and meet the needs of its customers, this mall retailer will be going through the âretail apocalypseâ …