The crypto world at the end of the year

The crypto world at the end of the year
20 December 2022     1454

The crypto world at the end of the year

In the last few months a lot of things have changed in the crypto world. On the one hand, users disappointed with the recent slumps are constantly on the look out for potential platforms, innovations that might prevent similar downturns.

On the other hand, different government agencies keep asking for a more thorough investigation considering these risks. Banks are simultaneously trying to understand the capabilities of cryptocurrencies, while at the same time trying to establish themselves as a powerhouse in order to weaken the decentralized opposition and make crypto services more reliable (mostly because of their own interests but also for the general safety).


Even more requests

All of this was implicit when, on the 8th of December, Senator Warren and Smith asked for accounting from FED. As they said, FTX catastrophe showed that crypto assets and services might be more deeply integrated in the banking operations than previously thought.


Bitcoin background


Whenever discussing potential problems in economics, banks are top priority. Naturally, this is partly because of crises such as the one in 2007. As such, this call to action from the senators is by no means an irregularity.

FTX crash might make a lot of things harder for the crypto world because of the abovementioned reasons. Considering the fact, that banks are too big too fail in the US (or almost anywhere else) the future of the crypto world will be heavily dependent on how it relates to the banking world.

Since the FTX story is relatively fresh (i.e. there has not been a thorough investigation), its long-term effects, so far, seem largely shrouded in mystery. Purely the idea of Bankman-Fried, the former CEO of FTX, testifying before congress is very intriguing. He has previously stated that he is ready to do so. However, considering he was arrested on the 12th of December, on Bahamas by US representatives, that option is not on the table for now. This, of course, has sent shockwaves among the crypto investors.

The story of Bankman-Fried instantly became deeply political. At first, he was considered to be a donor of the Democratic party, although as he later confessed, he had given just as many donations to GOP, with the added difference that all these donations were dark.

Additionally, SEC asked companies to tell investors about potential liabilities that may be associated with crypto currency use. Which might hint at serious problems that SEC is considering will follow the whole ordeal.



Crypto justice



Future possibilities

Obviously news like this negatively affects the perceptions of crypto investors. That is why Zhao, the CEO of Binance, suggested creating a shared fund. This seems like a decent idea on its surface and resembles the general attitude government agencies have towards banks. Crypto organizations do not have any such safety nets, which is why they rarely tackle significant crises well. At least a few companies are likely to take Zhao up on the offer.

Dividing up the profits and the shares will be a much more of an arduous process most likely. For this reason, he decided to take the first few steps and put out a tweet about creating his own fund. According to him, this fund will concentrate on strong projects, that struggle with liquidity problems. Though, he has yet to mention the scope of the project, how soon we are to expect it to get underway and how the investments are to be apportioned .

Things are not looking so great in the crypto world, especially since the entire Mark Zuckerberg meta layoff story. The support of Meta was an important aspect with regard to optimism towards future news. But these few pieces of news, along with market-wide price drops could turn out to be a serious blow.


Cryptocurrency and the government



The summary

December seems like an interesting month for crypto, there might be some additional dangers as well as a possibility for unification. Such a move from Zhao is not all that surprising; he has been quite cooperative with the government agencies in the past and has tried to integrate his work into the general orthodox financial world. This type of approach may allow other organizations to further develop and advance as well.

Although, the pipe dream that the crypto markets could stay entirely independent while being competitive with banks seems more unrealistic now than ever. There was never a genuine chance of that happening but the initial boosts got some users really hopeful.

Nowadays, the way forward seems to be through closer relations with banks and government agencies. The wild west, that most had imagined, is associated with too many risks for the users and government officials alike. Hence, the following year is likely to be filled with topics that are centered around this very issue.

Ika

Ika