In 2008, the support reserve consisted essentially of houses. In cryptocurrency, I’m pretty serious about it, the reserve of support is gullibility.
It sounds like you are saying, firstly, crypto is nonsense, but two, nonsense defines itself indefinitely, because as long as you can invent money out of thin air, you can find a sucker for it. Unless governments step in and say you can no longer do certain things.
Yes. The good news is that there are rules on the way. The Treasury is looking at these things very carefully because they basically have to make sure that these crypto-bozos can not ruin the real economy where people live. And they would ruin it, because they’re idiots. And they got a taste of it in 2019 when Facebook made its Libra cryptocurrency, or tried to do so, and all the regulators, central banks and finance ministries in the world said, “No, you do not. You are not fucked. Because Facebook did not know what they were producing and they were really arrogant by not caring that they did not know what they were getting in. So basically, about a month later, the entire US government, Democrats and Republicans, were united on this, crushed it like a bug.
So with regard to the issue of regulation, we are talking about something along the lines of that if you have a stablecoin, you need to have it audited and prove that you really have a dollar for each of the stablecoins that you think are supported by a dollars?
That kind of suggestion, yes. There are different versions of this which require stack coins to be issued by genuinely highly regulated banks, etc. Laws have been proposed in this regard. No one passed, but these ideas are very much in the air.
The fact is that regulators are reluctant to go too fast and they also have tight enforcement budgets. But I want to tell you who really wants to regulate crypto: police officers laundering money. FinCEN are absolutely humorless officers who do not care if they run over your company. And internationally, the FATF, which has laid down rules that regulators are asked to follow if they want their country to be allowed to trade with others. These guys put together a lot of rules that came in 2021 to make crypto transactions more traceable. I think we end up with some kind of two-speed crypto market. You want the devices that are known exchangers where people are traceable and the real money back and forth exchangers are relatively easy, then there will be another market that operates high on crack and is just licensed unregulated and a much harder time to get to the precious US dollars.
Most people do not own any crypto, but you have fidelity offers bitcoin in 401 (k) s you have Wall Street institutions that are increasingly investing in crypto. How can a krypton meltdown affect the wider economy?
The main choice you need to worry about is that these bozos really want to put their vines into the real money world. I think for many of them, it’s the end game: putting it into people’s retirement accounts. Now, the Department of Labor actually issued a statement in March warning financial advisers not to tell retirees to put their 401 (k) in crypto. And Fidelity would still offer this product. They really, really want to get into big things, because that way, when it falls apart, they expect the government to be the backbone of the last resort. And that’s something that has to be fought hard. It has not happened yet, but we must fear it.
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