The crypto industry is under targeted attack by US regulators, Galaxy Digital CEO Mike Novogratz made such a statement yesterday. He believes that actions against crypto companies, exchanges and individual digital assets are coordinated at a high level, and this phenomenon even got its name – Operation Stranglehold 2.0. Novogratz shared his strategy for dealing with regulators in an interview with The Block. Let’s talk about the expert’s point of view in more detail.
Evidence of the struggle of the authorities with the cryptocurrency industry is enough even now. In particular, this week the Commodity Futures Trading Commission (CFTC) filed a lawsuit against the Binance cryptocurrency exchange, accusing the platform of providing access to derivatives for US residents. At the same time, representatives of the exchange argue that Americans cannot use its capabilities, because this requires revealing their own identity during the KYC procedure.
Binance CEO Changpeng Zhao
This is not the first time Novogratz himself has commented on the topic of regulating cryptocurrencies. According to him, the authorities should pay attention to artificial intelligence, not digital assets. Still, the negative potential of the first technology is much greater.
Why cryptocurrencies are banned
Even a US banking crisis could be part of a larger strategy, Novogratz said. Here is his quote on the matter.
Think about Signature Bank and how quickly they closed. Look, we don’t know all the things. Barney Frank, who sits on the boards of Republic Bank and Signature Bank, said, “It’s crazy, they’re shutting them down.” My friends in banking also talked about the lack of clear reasons for closing banks.
Напомним, поводом для возникновения подобных слухов стало отсутствие неплатёжеспособности банка Signature. То есть если у Silicon Valley Bank действительно были проблемы с деньгами, то у Signature глобальной нехватки ликвидности не было. В связи с этим пользователи криптовалют допустили, что таким образом власти попросту хотят расправиться с индустрией децентрализованных активов — или как минимум создать серьёзные проблемы для неё.
Galaxy Digital CEO Mike Novogratz
Signature Bank is one of the three major US banks that collapsed in March 2023. What is most interesting, it was these banks that actively cooperated with crypto companies. Due to their closure, the liquidity of the crypto market has been significantly reduced, since it has become much more difficult for fans of the latter to introduce fiat money into the digital asset industry.
The US Securities and Exchange Commission (SEC) and its chairman Gary Gensler are trying to make crypto a taboo topic among bankers, the billionaire believes. The regulator puts pressure on banks that want to cooperate in the field of digital assets. Novogratz continues.
This is the “tax” that Gensler & Co. is imposing on our industry in an attempt to force the banks not to serve people. You know it’s real. We are smart enough or lucky enough to have many banking partners, but many of our portfolio companies that we help and many of our colleagues cannot access banking services either.
The collapse of the cryptocurrency market
Novogratz also believes that regulators have more important concerns than cryptocurrencies. For example, the national debt ceiling and rising inflation. But instead, the US Securities and Exchange Commission is focusing only on crypto while requesting additional funding due to its own “efforts”.
They have other things to worry about, but you might think crypto is the only thing on their mind. You know, Gensler recently asked for more money to fight scammers in the crypto industry. We have begun a wave of rapid development of artificial intelligence technology, so we need to regulate it and deal less with cryptocurrencies.
When asked by journalists whether the government’s actions are the result of concerns about the status of the US dollar as the world’s reserve currency, Novogratz responded as follows.
There is something in this. Elizabeth Warren hates cryptocurrencies for some strange reason, and she has a lot of power in the Biden administration’s finance department. But if Yellen and Lael Brainard oppose cryptocurrencies, this means that the essence is much deeper.
Senator Elizabeth Warren
Elizabeth Warren is a Massachusetts Senator who has long been a critic of Bitcoin. In the past, she has repeatedly called for a complete ban on transactions with digital assets in the United States, and the day before she even launched a re-election campaign for the Senate with the slogan “Warren is gathering an army against cryptocurrencies.”
Election campaign of Elizabeth Warren with a call to fight against cryptocurrencies
In an interview, Mike Novogratz touched on a bet involving former Coinbase CTO Balaji Srinivasan. Recall that earlier he bet two million dollars on the fact that the price of BTC will rise to the level of $1 million in just 90 days. Such a forecast can become a reality only in one case – if during the crisis the US dollar sharply loses its value.
Pari Balaji Srinivasan
According to Novogratz, this is an unfavorable scenario. He would like to see such an impressive bull run, but over a longer period of time – from 5 to 10 years. And we agree with his opinion – in this case, the growth of Bitcoin will organically fit into the adoption of the crypto market, well, people will not become a victim of a large-scale financial crisis.
Мы считаем, что активность американских регуляторов в этом году действительно напоминает целенаправленные попытки создать проблемы для индустрии криптовалют. В частности, сейчас блокчейн-разработчикам банально некомфортно работать с территории США, ведь они в любой момент могут попасть под прицел различных Комиссий и быть вынужденными заплатить штраф. А поскольку регуляторы подали несколько исков за настолько короткий срок, это создаёт впечатление заранее спланированной акции по борьбе с цифровыми активами. Здесь остаётся надеяться, что гиганты по типу Coinbase смогут уделить время судам и заодно доказать собственную правоту.
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