Despite the continued push for crypto adoption in the United States, there are still rumors of a potential ban in the country. Lending his insights, Barry Seibert, the chief executive of institutional crypto investment giant Grayscale Investments, expressed doubts over Washington’s ability to impose a ban.
Better Relationships and Improved Awareness
Seibert expressed his thoughts in an investor call posted on July 16, 2020. He explained that he was cautiously optimistic about the United States developing a robust regulatory environment for digital assets.
In part, he said, “For the first time ever, we are past the ‘ban bitcoin’ perceived risk. There’s enough support in DC from policymakers and regulators that Bitcoin has a right to exist and ultimately you can’t shut it down.”
Seibert also credited organizations like the Blockchain Association’s efforts, which have played instrumental roles in improving relationships with regulators.
“As an industry, we’re just much better off than we’ve ever been from a relationship perspective out in DC. [These two groups are] educating policymakers around the benefits of this technology in this asset class.”
The prospect of a Bitcoin ban continues to loom over the industry, despite the increasing demand for digital assets. The current administration has made its disdain for digital assets known. President Trump revealed he “wasn’t a fan” of Bitcoin due to its volatile nature and its propensity to facilitate criminal activity.
I am not a fan of Bitcoin and other Cryptocurrencies, which are not money, and whose value is highly volatile and based on thin air. Unregulated Crypto Assets can facilitate unlawful behavior, including drug trade and other illegal activity….
— Donald J. Trump (@realDonaldTrump) July 12, 2019
Steve Mnuchin, the Secretary of the Treasury, also explained that the government was going to adopt strong regulations for the crypto industry. As he noted in an interview, the government was working to reduce cryptocurrencies’ incidence of being used as “Swiss bank accounts.” For now, no such regulation has manifested.
Much Ado About Nothing
Given the administration’s disdain for Bitcoin, there have been speculations of a possible ban. However, notable economist and crypto commentator Alex Krueger explained in a Twitter thread last year that the government wouldn’t be able to make such a move.
1/ Could Trump ban Bitcoin?
Thread 👇 pic.twitter.com/KeDI35GU7C
— Alex Krüger (@krugermacro) July 15, 2019
Krueger pointed out that Bitcoin is a code. So, it is free speech — at least, theoretically. Since the First Amendment prevents a ban on free speech, Bitcoin’s inherent nature makes a ban impossible.
However, he also explained that the government could deem cryptocurrencies as too volatile. Thus, they could ban sales to retail investors. Such a move would render crypto exchanges unprofitable — and affect institutional investment firms like Grayscale.
While Seibert also credits the improved relationships with regulators, the industry has still not made much progress in that regard. The Securities and Exchange Commission (SEC) has forced Telegram to abandon its blockchain and crypto projects. The agency is also still battling social media firm Kik over the legitimacy of the company’s KIN token.
At the same time, applicants for Bitcoin exchange-traded funds (ETFs) haven’t gotten approval for the financial tools yet. This reluctance is despite several modifications to proposals and the widespread belief that ETFs can bolster institutional interest even more.
So, while the government’s prospects of banking Bitcoin are low for now, there aren’t many pointers to improved regulatory standing. Primarily, it appears the industry is stuck.