Recently we wrote about who gets to decide what is important for crypto. In retrospect it was the folks at the top of the crypto food chain that were making those decisions up to and through crypto winter. A lot of other folks got hurt rather badly due to rampant financial stupidity as well as out and out fraud. The starting point for that article was a position paper put out by a Republican presidential candidate, Vivek Ramaswamy. This candidate is far back in the pack and not likely to be the Republican candidate for president. However, it is entirely possible that Donald Trump will run again against Joe Biden and someone like Ramaswamy could be his pick for vice president. In the aftermath of crypto winter it has become clear that crypto needs to play by a clear set of rules or it will die. Ramaswamy wants to gut the regulatory capacity of the US government. Could Ramaswamy kill crypto if he ends up getting his way?
Crypto Is Not Ordained By Any Higher Power
Crypto started out as a really good idea. Then Bitcoin and the rest became speculative assets as prices rose, fluctuated, and rose again. Along the way the supposedly decentralized digital tokens, decentralized finance, and the rest became centralized. A handful of individuals controlled the majority of crypto. The mantra that crypto would always rise, would be a hedge against inflation, and more sounded a bit like when kings ruled so much of the world by “divine right.” Now, one of the crypto top dogs, Sam Bankman-Fried, is awaiting a possible hundred year sentence in prison. Changpeng Zhao is free on a bond and scheduled to pay a $50 million fine. It turned out that crypto was just another financial asset or tool that needed to play by the rules to avoid making a handful rich at the expense of the rest of us. It was certainly not something ordained by a higher power.
Millionaires and Billionaires Making the Crypto Rules
Bloomberg writes that the Ramaswamy plan is scaring the crypto industry. Ramaswamy is not going to be president but Donald Trump conceivably could and Ramaswamy could be his VP pick. It turns out that Trump has some of the same ideas about cutting the government to the bone and gutting the regulatory powers of folks like the SEC. If that should happen we would have a billionaire and an almost billionaire making the rules for the rest of us. When we think about how that turned out last time around it should be a caution to all.
Crypto Is a Good Idea In Need Of a Set of Rules
Crypto grew like crazy because folks bought into the hype. When it turned out that the hype was a lie, a lot of folks left crypto and will never come back. Those who stayed have realized that serious investors will not touch crypto unless it has the sort of guardrails that one finds in other investment products. The stock exchange, stockbrokers, mutual funds, insurance companies, and banks all handle people’s money. These folks have all had their problems and in each case regulations were developed to fix them. Part of what has helped Bitcoin make a partial comeback has been the heavy hand of regulators. The prospect of a well governed investment niche is attractive to folks like the one who manage trillions of dollars in assets. These folks are grownups who expect a viable investment product to play by grownup rules.
How Much of a Risk Are Ramaswamy’s Ideas for Crypto?
Every so often folks get fed up with how things are. They often decide to “throw the bums out.” When that happens it is not always a set of rational folks who take their places in the US House of Representatives, US Senate, or White House. It is often just the person who talks the loudest and makes the most promises and most simplistic promises. If they were to succeed in gutting US regulatory agencies, many folks in crypto might have a free hand again. However, serious investors will all leave and crypto could well dwindle and disappear before it has a chance to assume the financial roles it was designed for.
SlideShare Version – Could Ramaswamy Kill Crypto?
