Are you a crypto investor, enthusiast, or critic who thinks the industry needs regulations? Are you banking on traditional entities like the CFTC, SEC, FBI, and IRS to get the job done? Do you believe that these entities have Bitcoin’s best interests at heart? Are you rooting for favorable crypto regulations that favor investors? You should be forgiven for your positive and naive way of thinking.
Crypto regulation or crypto control?
The past year has seen the likes of CZ and Binance take the worst hit from the Security and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC). After settling his $4.3 Billion dues with the SEC, now the U.S. Department of Justice (DOJ) has said Changpeng “CZ” Zhao, should spend three years in prison for his role in enabling the crypto exchange to violate federal sanctions and money laundering laws.
Attorneys from the DOJ have submitted a sentencing memo recommending a prison term of 36 months and a $50 million fine for his violation of the Bank Secrecy Act, to which he pleaded guilty in November.
Hours later, Zhao’s defense team submitted its own sentencing memo, highlighting that no defendant in a comparable BSA case has ever received a prison sentence. Instead, they proposed that he receive probation, potentially including home confinement at his residence in Abu Dhabi.
One crypto analyst and X sensation who goes by Crypto Tea put it this way “the FBI calls crypto money so they can arrest you for money laundering [..] the IRS calls it property so they can tax you on capital gains […] the SEC calls it a security so they can sue every exchange [..] the CFTC calls it a commodity so you can’t use it as a currency.”
So, what is that these organizations are asking of the decentralized community in terms of the industry’s regulations?
Binance co-founder He Yi said that as CZ acknowledges that he may have made mistakes, his biggest one was ignorance. This should not be a mistake the rest of the industry’s community should continue making.
What does the SEC, CFTC, DOJ, FBI, and the IRS want for crypto regulations?
Last year, the House Financial Services Committee carried out a hearing titled ‘Oversight of the Securities and Exchange Commission’ with SEC Chair Gary Gensler as the only witness. During the recent SEC Oversight hearing in Congress, Chairman Patrick McHenry (R-N.C.) engaged in a heated exchange with Gensler regarding the classification of Ether as a security or a commodity.
This hearing witnessed a recurrence of the back-and-forth arguments, with the focus shifting towards inquiries about Bitcoin. On both occasions, Chair McHenry has consistently prioritized these questions as the opening inquiries during the hearing. It seems that policymakers are still grappling with the appropriate regulatory approach for the top two digital assets, Bitcoin and Ether, given their market size.
What’s really crucial is whether Congress should take action to establish a regulatory framework that instills confidence in consumers, investors, and businesses regarding digital assets.
What remains apparently clear is that each of these entities stand to benefit from crypto. How? You ask? From paid fines like in the case of CZ and social media influencers like the likes of Kim Kardashian. How else? Through confiscated digital assets from illegal seizures like the Silk Road.
Guess what the biggest win is? You have got it just right!! Absolute financial control. The onset of Bitcoin introduced decentralization that took away financial control from centralized entities such as those mentioned above.
As these regulatory bodies ‘help’ with crypto regulation, they are sending back money and power to Washington, D.C. Make no mistake, the industry’s regulations will favor the regulators more than it will crypto investors.
