FTX’s co-founder Sam Bankman-Fried received a 25-year prison sentence. Contrastingly, Steve Wozniak of Apple succeeded in appealing against YouTube for exploiting his likeness in promoting cryptocurrency frauds. The number of cryptocurrency scams and their associated platforms is being unmasked and brought to justice. Mainstream recognition of cryptocurrencies extends beyond the hype, with a growing understanding that “too good to be true” coins, tokens, or platforms are likely deceitful.
Regrettably, with cryptocurrency gaining renewed interest comes an increase in scams. A common regulatory response, such as criticizing Bitcoin (BTC), unfortunately drives more individuals towards falling prey to criminal activities. I’ve experienced this firsthand, having been impersonated on social media due to my involvement in blockchain technology. The criminals behind the scheme attempted to steal funds from my followers and acquaintances. Despite reporting the incidents to the police and obtaining injunctions, no significant progress has been made in apprehending them.
Cryptocurrencies face numerous challenges that are ripe for resolution. However, from Europe to the US, regulatory bodies continue to target Bitcoin as if it were a mythical menace. The European Central Bank’s most recent statements illustrate this perspective: “Bitcoin has fallen short of its goal to serve as a universal digital currency operating without central control,” wrote Ulrich Bindseil and Jürgen Schaaf in a blog post for the ECB.
In simpler terms, the comments allowed unfounded myths about Bitcoin’s supposed criminal connections to be voiced. The article by Bindseil and Schaaf contained numerous errors, but six parts stood out for their misleading context.
Initially, the pair argued that the SEC’s approval of Bitcoin spot ETFs wouldn’t ensure safe investments in Bitcoin. However, no investment is risk-free by nature. Not even stocks listed on European exchanges are safer than Bitcoin spot ETFs. But, the regulatory oversight and institutional endorsement bring a level of legitimacy and security that is often overlooked in their criticism.
European Central Bank (ECB) sees approval of Bitcoin Exchange-Traded Funds (ETFs) as a significant development for the cryptocurrency, despite its perceived lack of value or intrinsic worth.
— Gabor Gurbacs (@gaborgurbacs) February 22, 2024
The critics argue that Bitcoin’s true worth is nonexistent due to its failure to live up to its initial goal as a universal decentralized digital currency, and label it as unproductive. This comparison to gold being worthless because it no longer serves its traditional purpose of being used in coins is misleading. Gold retains value, just like Bitcoin does. Although it isn’t commonly used for everyday transactions, Bitcoin functions effectively as a hedge against inflation caused by fiat currencies due to its limited supply. The context of what gives an asset worth is crucial and is often overlooked in this debate.
The authors criticized Bitcoin mining for supposedly causing pollution without providing essential context. For instance, how much electricity does Europe’s digital banking system require as an alternative? Moreover, Bitcoin miners have made considerable progress in using renewable energy sources, whereas other blockchains have drastically reduced energy usage by up to 100% through proof of work (if they weren’t already carbon neutral or negative).
Bitcoin has been criticized for being associated with illegal activities like money laundering and terrorism financing. There have indeed been instances of this, such as the recent arrest of a British woman for laundering funds for a criminal organization using Bitcoin. However, it’s important to note that Bitcoin’s transparency is what led to her capture. Contrastingly, cash remains the go-to method for money laundering due to its anonymity, as acknowledged by the U.S. Treasury Department.
Surprisingly, the last two contentions raised are regarding regulators’ influence on Bitcoin markets. They argued that Bitcoin’s value is susceptible to manipulation, and its market cap and price point to a speculative bubble. Price manipulation is an ongoing issue in various financial markets – for instance, the European Commission levied over 1 billion euros in fines against banks for manipulating the foreign exchange market between 2007 and 2013, and a recent lawsuit in the UK alleges the same price-rigging. However, no such occurrences have been reported with Bitcoin (Should regulatory bodies feel compelled to intervene, they are more than welcome to do so).
Robert Shiller, a Nobel Laureate recognized for his studies on bubbles and market trends, posits that speculative bubbles don’t solely represent market insanity but can also symbolize emerging technology. In simpler terms, they represent the market’s efforts to assess and value innovative asset classes. Regrettably, Bindseil and Schaaf overlooked this historical and comparative perspective in their comments.
In summary, they argued that no regulation exists for Bitcoin, causing misunderstandings and risks. However, we counter this claim by highlighting the European Union’s MiCA law and various international testing grounds for cryptocurrency innovation. This assertion is incorrect, as we return to our initial discussion: The approval of Bitcoin spot ETFs represents a regulatory measure.
Are the recent comments about U.S. Bitcoin ETFs and the increasing consumer inquiries in Europe coincidentally linked to the surging price of Bitcoin versus conventional assets and currencies? No, this is not an accident. Consequently, any regulatory body disregarding these factors without conducting thorough investigation is engaging in a distinct game.
Regulators who focus on targeting Bitcoin over other potential issues may be willfully ignorant of the cryptocurrency sector, which is problematic given that the European Central Bank is developing a digital euro and could benefit from studying Bitcoin’s security and success. Alternatively, they might be deliberately trying to keep some consumers and businesses away from cryptocurrencies. Neither stance instills faith in their technological competence, but more crucially, neither strategy equips citizens with the necessary caution against fraudsters.
Regulators should strike a harmonious tone with the public, including both consumers and businesses, as they navigate the digital asset landscape together. By acknowledging the inherent risks associated with these assets while highlighting their innovative potential, regulators can offer a more relatable and authentic perspective. This approach invites exploration of the opportunities, obstacles, and potential pitfalls of digital assets, empowering individuals to make informed decisions based on a comprehensive understanding.
It’s misleading to discredit an entire industry by targeting one of its strong points. Using Bitcoin as bait to draw you into a presentation about a questionable tokenomic scheme is similar to this approach.
This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of CryptoMoon.
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2024-04-25 01:48