Much of the point of this blog revolves around money. It revolves around success. It revolves around different news items that will impact business, markets and in turn, life. I will often, during a conversation, make a point using a trading metaphor. It’s all risk/reward according to Bill, remember?

The United States is an economy based on business. In fact, I think that the US economy is a business. Our government is here to help us have an orderly society, but they partially base that on an orderly economic system, i.e. the Full Faith and Credit that backs the US Dollar. And in return, we pay the government. I’m not here to say that it’s a bad thing, or start a discussion on the fairness (or lack thereof) in our tax system or solutions to the many problems within. I’m here to point out that collecting money is one of the things our government does, and therefore in my mind it’s a business.

The idea of a business is to make money. In theory, the US is a non-profit but it does need income. And it’s got competition for that income. Other countries are also in business. They all have spending that needs to be supported. Yes, they also all go into debt (we certainly do, but that’s for another blog entry), but other business take out loans as well. Hopefully you’re beginning to see my point. The neighborhood bodega and the US Treasury are very similar. Perhaps a Credit Union would be a closer comparison, but let’s throw some love at the local bodega; it’s a tough business, as is collecting taxes.

All of this brings me to my Question o’the Day: Why is Gary Gensler trying to convince an entire industry to move out of the US? I have been deeply immersed in the crypto industry for over 5 years. Both of the places I’ve been, Kraken and Anchorage Digital believe in doing things in a manner that should and could be fully in line with traditional financial industry (TradFi) regulations. AML/KYC is done, records are retained for years, yada yada yada. Point is, these entities are following at least most of the rules. Kraken actually paid a fine and stopped a staking program in response to enforcement action. Same thing JP Morgan would do for a similar faux pas.

Yet, here we are. Binance being hunted (I’m not sure some of it isn’t deserved), Coinbase stock tanking in response to SEC action taken earlier this week. Anchorage has an OCC Consent Order hanging over its head, with every effort being made to satisfy all the conditions. Kraken and Anchorage seem to be in the position to at least keep doing business, but is that just for now? Wasn’t all that long ago that a few banks had some troubles. I’ll write a blog about the Fed’s role in those next perhaps, but it wasn’t lost on a lot of people that the problems seemed to start at banks that were particularly crypto friendly. Coincidence or Conspiracy, you pick your side. Either way, it’s not good for business.

All of these firms, save Binance, have continually tried hard to engage with regulators and get true guidance and regulation around the industry. The only one Gary Gensler seemed to listen to was Sam Bankman-Fried. Remember SBF? I’d hate to think that all this noise, and torching of an industry, would be to save face. Everyone in the industry has been wrong. Traders, Portfolio Managers, Analysts; they all learn from their mistakes and move on. Letting your ego get in the way of what’s best for an industry and truly for investors? Again, not good for business.

As I’ve often commented, crypto is a genie that isn’t going back in the bottle. As an ex-trader, if there’s the opportunity to buy something low and sell it high, people want in. And if there’s liquidity as has built in crypto, the opportunity is more and more attractive. The finance world is waaay too invested (pun intended) for this to be shut down. Particularly by the only person that seems to believe he can do it. Other US financial regulators as well as people in Congress feel dialogue will lead to the best solution…and then that solution can be taxed! And that, my friends, would be good for business.

Ask the European community. They understand that creating rules for firms to follow, even if barely, will result in more trading, more fees, more taxes, more income for a government. This is good business. This is intelligent use of resources. It takes a lot less to figure out how to fit these products into rules that actually exist or can be written and thoughtful than it does to sit and try and burn the whole thing down. We’re looking at a LOT of lawsuits in this country. For what? Postponing the inevitable I truly believe.

Yes, regulation is good for business. The EU approved MiCA in May and plans to have it implemented by this time next year. The UK has stated that they will have regulatory framework for crypto assets in place in 2024 as well. The US? Looking for ways to shut down every crypto business they can find, even if it’s a couple of degrees of separation. So it’s clear the path to success for the financial crypto firms is to move out of the US. If this was the end of it, maybe livable…but it isn’t the end of it.

I’ve lectured on how crypto is not so mystical as it is simply an improvement on the idea of a ledger, used for thousands of years in different forms. So if we buy into the fact that record keeping is what this is all about, and with it transparency, equality, financial and personal empowerment and freedom, then really moving crypto offshore will move a great deal of innovation with it. The companies that will rely on some part of a crypto will spread across virtually every industry. I remember my dad using early IBM PC’s for accounting; Lotus 1-2-3. Now my computer is in my pocket, connected to yours and everyone else’s. I’m glad we didn’t send Lotus and in turn Microsoft with a little product called Excel to another country.

So where do we stand? Waiting for the inevitable. One person to realize they can’t always get what they want, but that the country should get what we need (shout out to The Stones). Regulators and regulations that really do have my best interest at the center. It would certainly be a good start.