Bitcoin is winning the regulatory landscape and bitcoin only companies are winning too

This is an opinion editorial by Julian Liniger, co-founder and CEO of Relay.

Bitcoin exists for a few reasons: as money that can be used by anyone, anywhere, and as a monetary commodity that is guaranteed not to be diluted or devalued by a central bank. But it’s also a piece of software that intentionally takes away the power of insiders — it doesn’t matter if those insiders are big miners or bitcoin whales.

What we have seen in the larger crypto space over the past few years is a perversion of those ideas and principles. The fact that the US Securities and Exchange Commission (SEC) is (finally) waking up to those conspiracies was to be expected.

when profit outweighs common sense

The search for exponential profits with little upfront investment of time, brainpower or capital has not helped crypto-token Ponzi schemes to thrive. This has allowed rent-seekers such as FTX, BlockFi, Luna, Celsius, Three Arrows Capital and countless “web3” projects to be treated as “innovations” rather than just pure cash grabs.

While it’s a venture capitalist’s (VC) job to bet on something that will make money and shape the future of technology, the audacity with which crypto-Ponzi industry insiders in recent years have pushed their agenda Scaled up he is incredible. we read stories of a Former Coinbase manager sentenced to two years in prison For our users, and we know that Andreessen Horowitz (a16z), one of the largest VC firms in this space, Ponzi schemes like Helium have been banned,

The marketing approach that A16z adopted for its projects was Summarized by Corey Clipston,

“Most bitcoiners promoting bitcoin are simply buying and holding as much as possible – and the people who love it most are the people who never sell. This is the exact opposite of what you see with the likes of a16z: full-frontal assault, marketing through all your channels, massively after buying a bunch of cheap Solanas from a centralized team controlling it in the spring of 2021 Executing pumps on. , They ⏤ and all their VC friends ⏤ were selling the top in late 2021 while claiming to the world they were HODLing.

‘Crypto’ was always a cash grab disguised as a technological innovation

Anyone who learns more about bitcoin will soon realize that this is not true. The block size debate is, fortunately, behind us, but new things like full mempools and the ordinals protocol show that scalability is still something to be fully explored. I believe that the Lightning Network, as well as similar solutions, offer a viable path towards secure, fast and affordable transactions, but we are not fully there yet.

Trying to improve the bitcoin network is a noble cause, and if you think it can be done, it’s a legitimate cause to try it yourself. But the bitcoin spinoffs we’ve seen over the past few years have failed in terms of adoption, brand value, and price. We know that in 2017 ICOs were largely cash grabs among retail investors, with no real innovation or market proof so far. Hollow buzzwords like “Blockchain” soon disappeared, only to be replaced by an even more vague concept of “Web 3” in the wake of the COVID19 pandemic.

play silly games win silly prizes

Today, there tThere are thousands of crypto tokens out there, the vast majority of them were created from the outset as clear Ponzi schemes without any long-term outlook other than benefiting a small group of insiders. To be honest, I would prefer to let the market decide their fate, not the regulators. But the reality is that the US is now cracking down on people like former FTX CEO Sam Bankman-Fried after the SEC failed miserably to stop them.

SEC boss Gary Gensler recently clarified that bitcoin is a commodity and, therefore, does not fall within the sphere of his agency. And now, in the SEC Lawsuit against BinanceIt appears that the world’s largest crypto exchange, Gensler is preparing to crack down on crypto ponzis, as it contains serious allegations against the company and also states that a series of crypto projects are being passed off as securities. must be defined. These include big names like Solana (SOL), Cardano (ADA) and Polygon (MATIC).

I don’t want to cheer the SEC or any other regulator, because we all know that in the US, we barely managed to avoid the 30% energy tax on bitcoin mining. And the powerful people who don’t want bitcoin to win will find other angles to attack it. But at the same time, bitcoiners warned about FTX, Terra Luna and other dubious crypto projects from day one. I’m sorry to everyone who burned their fingers and lost money by trusting those criminals, but it’s also understandable that bitcoiners are celebrating this “told you so” moment.

Crypto-securities buzz is coming to Europe too

love it or hate it, Market in Crypto-Assets (MiCA) Regulation It is the first comprehensive regulatory framework for cryptocurrencies in a major economic sector. Unless you think the free market should take care of scams and bad actors (which would be a fair point), you probably see MiCA as a step in the right direction. At least it’s a different approach from the “burn everything” spirit we’re getting from the Democratic Party, the SEC, and other actors in the US.

But the MiCA is the starting point rather than the end when it comes to taming the “crypto wild west” in Europe. A few days after the signing of the MiCA in May 2023, a Studies published by none other than the European Parliament came to the conclusion that more steps need to be taken for MiCA to really work. In fact, the study came to the same conclusion as we’re already seeing unfolding in the US: It recommends that lawmakers take a closer look at things like DeFi, staking, and NFTs. and most importantly: All crypto assets should be treated as securities by default,

I think that, no matter what happens in terms of regulation, it’s important to remember what makes bitcoin unique and why we’re here in the first place: it’s an asset that you can actually own. No one can shut it down or control it while it is on the network. Oh! That is the matter. As Adam Back recently said, Bitcoin Is “Antifragile” To Regulatory Pressures, And we can already see that this is the key difference between random crypto projects and bitcoin.

Bitcoin only and non-custodial is the way forward

Again: I’m not cheering for more regulation. I believe in the free market, and I think that with or without laws, the bad actors will eventually be weeded out. On the other hand, I feel for everyone who gets scammed and loses money in shameless crypto scams. So, I also understand why some guardrails are needed, especially when bad faith actors are disguising themselves as “tech innovators”.

Companies that focus on bitcoin and offer real, non-custodial BTC will flourish. Players who provide countless, dubious Ponzi tokens to their (novice) users will not only face regulatory scrutiny, but also lose the trust of their customers when tokens that were once promoted as the “next big thing” There seem to be voids amid strict regulation.

Now, more than a decade after Satoshi Nakamoto invented true digital scarcity, the bitcoin network as a true cryptocurrency is stronger than ever. An asset that cannot be diluted, that cannot be easily replaced and that is not founded by a small group of insiders who set the rules. I don’t know what the future holds for bitcoin, but I do know that a lot of things bitcoiners like me have been repeating about “crypto” and why bitcoin is different are more true today than ever.

This is a guest post by Julian Liniger. The opinions expressed are solely his own and do not necessarily reflect the opinions of BTC Inc. or Bitcoin Magazine.