new York Bitcoin will soon be worthless: This was recently announced by the Chinese state newspaper “Economic Daily”. Should investor confidence decline in the future, or sovereign countries declare the digital currency illegal, it will return to its original value, according to the ruling. And that’s zero dollars.
The statement is not surprising at first because the Chinese government has always strictly regulated cryptocurrencies. Last year, the central bank declared all transactions related to bitcoin illegal.
In mid-May, the collapse of the crypto project Terra wiped out an estimated $ 50 billion. And now more and more crypto-platforms are freezing customer funds. With Celsius, the first platform even filed for bankruptcy Thursday night, while crypto exchanges begin firing hundreds of employees.
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Despite this development, hardly anyone in the United States wants to know anything about the demise of cryptocurrencies – on the contrary. Cryptocurrencies are the future of financing, said Dave Grimaldi of the Blockchain Association, responsible for exchanges with government agencies. Cryptocurrencies are something of a challenge, but everyone recognizes that digital currencies are here to stay, he assured.
Cryptocurrencies are already prevalent among the American population: According to a survey conducted by the opinion research institute PEW from November last year, 16 percent of Americans have invested in or traded in these currencies.
Cryptocurrency: Companies also see crypto as part of everyday life
The entrepreneurial side is also still behind crypto – at least behind some currencies. “Bitcoin has its ups and downs,” said Ahon Sarkar, manager at bank-as-a-service provider Helix in Q2. As with any other asset class, investors need to be prepared to invest long-term and cope with downturns instead of trying to predict market movements.
Julapa Jagtiani, a consultant at the Federal Reserve Bank of Philadelphia, had already stressed the benefits of cryptocurrencies by the end of May: Not all of them lost 90 percent of their value in the crack like Terra, she said. Some of them would even have been pretty good.
Brian Korn, a lawyer at the American law firm Manatt with responsibility for fintechs and blockchain, also says: “Digital assets, especially Bitcoin, are not just becoming mainstream in the sense that people are buying Bitcoin.” In the future, many could use the digital currency to actually use it as a classic financial service, for example, getting your own salary paid out.
In light of the extreme market turbulence and the large price fluctuations, this is currently difficult to imagine. Due to the high losses, much trust in crypto may have been lost.
Entrepreneur Sarkar sees rather a necessary market shake-up in the cryptocurrency crash: While cryptocurrencies that were based on hype and provide no direct benefit are disappearing from the market – such as Terra and Luna – Bitcoin, for example, would play an important role in the future. It has become ubiquitous and has found clear use cases, Sarkar explains.
Crypto markets: Call for regulation
Despite the positive mood in the Big Apple, the crypto-downturn has once again sparked discussions about the security of digital currencies and the associated risks to classic financial systems. Ashley Harris, a lawyer at blockchain start-up Figure Technologies, predicted in late May that there would still be turbulent times from a regulatory standpoint.
>> Read here: Despite the fall in prices – How Bitcoin Millionaires Affect US Politics
In mid-March, the US government under President Joe Biden issued a decree requiring US authorities to investigate the risks and potential possibilities of cryptocurrencies and the blockchain technology behind them. “The United States must maintain technological leadership in this fast-growing area, foster innovation while reducing risks to consumers, businesses, the financial system and the climate,” the order said.
Harris explained, “The regulators are in a state of learning and are very careful every time something happens.” From the authorities’ point of view, the current price falls are another indication that caution is required. However, this would be contrary to the further economic development and competitiveness of the United States.
“There are competing tensions that we navigate for,” Harris said. The question of what the right level of regulation will be will keep financial systems busy for some time – not just in the United States.
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First Release: 17/07/22, 13:44