Crypto: a source of safety and geopolitical strength?

Born partly in reaction to the 2008 financial crisis, cryptocurrency was created as a radical alternative to the traditional financial industry. Rewind 15 years: banks that were “too big to fail” had failed and subsequently caused mass panic across the globe. 

A few weeks ago, there was the second biggest collapse of a bank in US history, Silicon Valley Bank. This time, with cryptocurrencies a prominent financial instrument in the global economy, bitcoin has increased by 40% since the fall of the bank. Whatever the reasoning, bitcoin has proven to be a winner during this latest wave of economic uncertainty. 

In response to 2008, in the bitcoin whitepaper Satoshi Nakamoto laid out a cashless system, which didn’t rely on a centralised third party to manoeuvre the financial system but outlined a peer-to-peer trust-less system built on the blockchain. As uncertainty and instability creep back into the global financial system once again, will Satoshi’s vision of decentralised finance be driven even further into the mainstream?

Trust and safety

A hurdle crypto must jump to achieve this is its association in the press with criminal activity. Against this backdrop, it’s understandable that some people are cautious to dip their toes into the market’s often choppy waters.

Tides are turning though. An increasing number of cryptocurrency platforms are becoming regulated in the countries they operate within, and the top priority for a vast number of financial regulators is clamping down on bad actors and allowing the crypto space to grow in a way that is healthy and does not put everyday people at risk. Many EMEA and APAC nations are moving ahead positively with regulatory frameworks – in contrast to the US, where there is no momentum or clarity on the direction of crypto regulation. 

One of the much-loved, original trading platforms innovating in the US, Bittrex, announced that it would be sunsetting its US trading platform in April due to “regulatory uncertainty”. What we may start witnessing is a flight overseas of the crypto community – to nations more optimistic about the potential of the technology and more empathic to the millions on their shores who stand to benefit from it. 

Retaining geopolitical leadership

If other markets create a competitive advantage around welcoming crypto innovators with sensible, tailored regulation, the US may see another industry offshore all its intellectual property, talent and commercial advantage for one of the formative layers of the next generation of the internet. 

The industry ask is simple – to put the customer first when prioritising regulation. Those who wish to keep some of their money in crypto and “go digital” should be able to trust platforms that are reputable and properly regulated to ensure their money is protected. Many of the doomed platforms or those facing increasing scrutiny are domiciled in countries that have little or no regulatory requirements related to crypto, data protection or privacy. The US, on the other hand, traditionally has the highest financial standards and highest capital requirements for any country in the world – so there is good precedent that crypto regulation should follow similar safeguards. People could then look for these US platforms with trust and confidence that their funds, data and privacy are being well looked after. 

This is not just about the financial well-being of US citizens – it is also about geopolitical leadership through innovation and technology. 5G telecommunication technology, mobile payments, solar cells, chip manufacturing – so many formative tech fields have been lost to foreign leadership by the US. In a formative digital area where we could so easily have a vibrant and pioneering blockchain hub, the signals are getting stronger and clearer that the crypto pioneers are not going to have the support of the US regulatory community or government infrastructure. It is not too late to resolve this – but it will need a clear intervention on the course we are currently on. 

A brighter financial future

As the safety and regulatory measures in crypto grow, it’s inevitable that digital banking incorporating crypto will become a reality for more of us – and crypto will stop being regarded as just an investment asset via a bitcoin market price or the vehicle for bad actors to get rich.

By harnessing the power of blockchain technology in a safe and secure manner, more and more everyday people will relate to crypto's ability to tackle real-world problems like exorbitant fees, unnecessary delays, and conscious bias in access to financial services. 

The US has a natural and compelling advantage to belong at the forefront of web3 and all its transformational technologies – including crypto. It is now that the government and regulatory community can signal that this is where they want to be – and create a clear purpose and strategy around enabling the crypto community to bring new business, jobs, IP and most importantly, financial well-being to millions and stave off the economic disarray that could ensue without it.

About the author

Todd Crosland founded CoinZoom in 2018 and assembled a world-class team that brought decades of financial trading and regulatory experience to the growing digital currency marketplace. Before getting involved in crypto, Todd was the Founder and CEO of Interbank FX, a Futures Commission Merchant and Retail Foreign Exchange Dealer registered with the CFTC.