One year ago, crypto was able to successfully scrape in order to gain entry into Washington. This door was shut down in the aftermath of crypto’s winter and FTX’s dramatic collapse.
Why it is relevant: Obtaining legitimacy in Washington was an integral part of the industry’s push to the mainstream. Recent announcements by the Biden administration indicate that there will be a crackdown.
The news is driving anyone trying to start a cryptocurrency company to a sombre feeling at best from federal agencies and the White House. In the past two weeks, the government has repeatedly given crypto the cold shoulder.
First, a cryptocurrency-friendly bank was denied its request for membership in the Federal Reserve system. Custodia Bank believed it had done everything according to the book.
A large scale rejection of Custodia by the Fed was a significant blow to an industry that has always sought disruption in traditional finance. It needs access to the systems underpinning it, including the Fed’s payment network, in order to do so.
As if that wasn’t enough to make the point clear, the Fed also warned all other banks that they must ask permission before engaging in any cryptocurrency activity (and it doesn’t sound like any won’t get the nod).
The White House issued a big picture statement, effectively chasing Congress away from the idea of passing any cryptocurrency bills this year.
What we are watching: Companies that follow the rules and operate most closely to paper money will be the likely losers.
Companies such as Coinbase and Gemini are fiat on ramps and can be hurt.
The blockchain natives who live off their books are the winners or at the very least the ones with the most to lose.
The bottom line: In March of last year, the Biden administration issued a call to its agencies for research on the topic of cryptocurrency. Its most recent message indicates that it has finished studying the topic and reached a conclusion.
If there is a crackdown, expect the current rally in crypto prices to end. You can expect a lot more flat-to-down trading until the next big idea comes along.
Author
Chris Munch is a professional cryptocurrency and blockchain writer with a background in software businesses, and has been involved in marketing within the cryptocurrency space. With a passion for innovation, Chris brings a unique and insightful perspective to the world of crypto and blockchain. Chris has a deep understanding of the economic, psychological, marketing and financial forces that drive the crypto market, and has made a number of accurate calls of major shifts in market trends. He is constantly researching and studying the latest trends and technologies, ensuring that he is always up-to-date on the latest developments in the industry. Chris’ writing is characterized by his ability to explain complex concepts in a clear and concise manner, making it accessible to a wide audience of readers.
