Governmental interactions with the cryptocurrency industry have grown more complicated recently. This is especially clear when looking at the complex connection between the U.S. government and Coinbase, the biggest cryptocurrency exchange platform in the nation.
In a recent Roundtable conversation, Rob Nelson, the host, and Nick Mancini, the director of research for the cryptocurrency trading site Trade The Chain, attempted to explain some of the intricacies in these unstable partnerships.
Nelson drew attention to the conflicting approach the American government has taken towards Coinbase. The U.S. Securities and Exchange Commission (SEC) has filed a complaint against Coinbase. Paradoxically, the government appears to be close to approving the introduction of bitcoin spot exchange-traded funds (ETFs), with Coinbase poised to act as a custodian.
Nelson also brought up Coinbase’s stake in Circle, the company that created the USDC (U.S. dollar currency). This, according to many, might serve as the basis for a future central bank digital currency (CBDC). However, it is still unclear how each component fits with the others.
Mancini added his thoughts to the discussion. He emphasized how bitcoin had done admirably this year, even outperforming gold. Particularly for seasoned investors, such a feat can be rather upsetting.
Mancini offered the following insight into the reason why the government is reluctant to accept cryptocurrency: “It’s a fear perspective. Observing a trillion dollars’ worth of assets funnelled into a class that remains largely uncontrolled is bound to invoke apprehension.”
He noted that it is interesting that despite their typical disagreements, global heavyweights like China and the United States appear to have a skepticism towards cryptocurrencies.
Given BlackRock’s interest in launching a bitcoin ETF and its close ties to government interests, the connection between Coinbase and the government takes an even more perplexing turn. Mancini openly admitted his confusion, stating that Coinbase was dealing with legal issues from the US government while also communicating with BlackRock, a key financial ally of the US government.
Mancini explained how the inherent volatility of cryptocurrency might be profitable for established financial institutions while elaborating on the possible benefits it brings. Despite the danger, cryptocurrency’s higher fees imply more lucrative rewards.
While the traditional financial community struggles to adapt to the burgeoning crypto phenomenon, the government’s strategy seems to be based on mistrust and a lack of control.
Cryptography signifies a break from the norm in terms of finance, according to Mancini. “It’s an alternative investing route, a safeguard against the traditional. Despite this, there are several opportunities for the government to make money and exercise influence. They simply appear more committed to resistance.
This complex relationship, which is riddled with inconsistencies and paradoxes, emphasizes the difficulties and opportunities that the landscape of cryptocurrencies will face in the future. Only time will tell how the interactions between governments, financial institutions, and cryptocurrency platforms will affect the development of digital finance.
