SEC Sues Binance and CEO Zhao for Breaking Securities Rules Regulator says firm operated unregistered securities exchange Binance routinely flouted basic KYC rules, SEC alleges
On monday some us regulators cracked down on Binance.
The allegations flying through the room should be obvious.
SECโs Coinbase Lawsuit Heralds Deepening US Crypto Crackdown
The crackdown seems to be broader. The outcome of this will almost certainly be years of legal battles and lawsuits.
For the government it will all boil down to the question whether Bitcoin is a security, is my guess.
How does the US government see Bitcoin
Bitcoin is a currency. Bitcoin is money. Indeed, it is the best money in the world. No other money in the world is hard and decentralized with such a large userbase, permissionless, private, low fees and instant via lightning and digital.
However, this isn't how the governments around the world see things. Fist of all it must be said that opinions on whether Bitcoin is a forex currency or a consumer product or a resource are very split.
While the pure facts make it undeniable that Bitcoin is money, governments around the world are kind of trapped inside the cage of their own laws.
The strongest argument (again, in the eyes of governments) for Bitcoin being a currency is El Salvador declaring it as such.
Bitcoin being a consumer product in the eyes of laws is kinda dead.
Sorry, the fungability and liquidity etc make this argument untenable anymore.
It was nice while it lasted as a "reasonable doubt" kinda argument tho.
Now to the elephant in the room: security?
Brian Armstrong: There is this thing called the Howey Test, which is the definition of a security. It says, is there an investment of money in a common enterprise with an expectation of profit based on the effort of others? So it has those four prongs. The important thing to know is that all four of those things have to be true. So there's various ways that you could imagine a crypto asset would not be a security. If it's sufficiently decentralized, there's no common enterprise. If there's some specific utility around it, it's not just for the purpose of the value of going up. So what we need in the United States at this point is regulatory clarity, clarity for a long time-
So this question remains open. I personally see governments setteling on "resource"/"commodity" in the sort term and currency in the long term.
But it's anyones guess really
Why Exchanges are bad
Exchanges are like banks.
They hold fractional reserves.
They profit from fractional reserves.
Thus they have an incentive to advertise against self custody.
Their incentives are diametrically opposed to us.
They are the very thing we set out to defeat, why are we even here? Why do they have so many customers? FCK GO BCK
Bitcoin-backed fractional reserve money will come. No matter if we like it.
It will come with traditional banks.
It will come with literal physical cash because the stupidity of humans in unmeasurable.
Humans are dumb, the possible profits from it a low hanging fruit. Like water finds its way downhill.
And it's here in the form of exchanges first.
When exchanges were banned we could push this thing as back as possible and have build up as much as possible real self-sovereign decentralized infrastructure.
How would Bitcoin look without exchanges
On the surface this would be a blow to Bitcoin. Usernumbers going down, maaaybe even mempool less usage. Maybe more if people use onchain transactions to replace custodial stacking.
But only on the surface. This would be good for Bitcoin. Bitcoin is an underground currency at its hearth.
This is how Bitcoin was designed to be.
The users might be fewer but the users would be usig Bitcoin in the spirit of Bitcoin.
I wrote about why we don't need hyperbitcoinization before: #159684
To me, real Bitcoin usage is more important than easy access for newbies. I'm all for easy access for newbies, it might even be the most underrated property that devs in this space don't focus on enough. But not for the price of selling my sould in a faustian exchange to centralized exchanges.
Final thoughts
This is actually not really my opinion.
I'm not a fan of government intervention in general and dgaf what they do.
Just tried to give these thoughts a spin to share these thoughts.
The only thing I actually care about in the end of this thread is: centralized exchanges bad