Opinion: Authorities Clamping On Telegram And Libra Could Signal Negative For Bitcoin

by
George Georgiev
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Authorities are waking up when it comes to cryptocurrencies. In the past month alone, we saw a couple of very serious actions taken against major projects in the field. Facebook’s Libra, Block.one’s EOS, Telegram, KIK, all of them and more saw challenges in the face of lawmakers and regulators across the board. A lot of people, especially those who felt like Telegram was a scam and Libra was a “centralized Bitcoin” embraced the news with sort of positivity. Amid this legislative chaos, however, it’s undoubtedly important to take some time and think what all this means for Bitcoin, being the major cryptocurrency and the one that has so far managed to stand the test of time and markets. 

A Quick Retrospect Into What Happened

First things first, let’s have a look at what actually happened in the last few weeks, that needs attention so much. 

Let’s start with Facebook’s Libra as it’s undoubtedly among the most heavily discussed and anticipated events in the cryptocurrency field. Last month, two of the EU’s most prominent members, France and Germany agreed to block the project on the merits that “no private entity can claim monetary power, which is inherent to the sovereignty of nations.” Shortly after that, David Marcus, head of the project, said that Libra is not actually planning to create new money. Regardless of his explanations, however, things went south from there as PayPal left the Libra Association, followed by eBay, Stripe, Visa, and MasterCard. This led many to deem the project essentially dead. We’ve yet to see how things will develop. 

Going forward we saw serious actions taken by the US Securities and Exchange Commission. As Cryptopotato reported, Block.one, the publisher of EOS which managed to raise upwards of $4 billion in its ICO, was fined with $24 million for conducting an unregistered public offering. 

Just a few days ago, the SEC also halted the token sale of Telegram’s TON cryptocurrency. The reasoning behind it is that it’s unregistered and fails to comply with existing regulations. 

All of this happened in a time span of less than a month. Given that authorities across the globe have been traditionally inactive so far, it definitely seems like lawmakers and enforcers are starting to wake up. And it also appears that the above news was embraced positively by quite a lot of people

But what does it mean for Bitcoin?

This Could Spell Trouble For Bitcoin As Well

Now, it’s important to note, before jumping into this, that technically it would be nearly impossible for authorities to de-facto shut Bitcoin down. Obviously, the network’s distributed nature would make this challenging at best. 

However, there’s plenty that authorities could do that could impact Bitcoin very badly. The regular person who’s not aware of its decentralized nature doesn’t really care that he can obtain Bitcoin despite a hypothetical ban. For the average Joe, the authorities saying that Bitcoin is banned and that he can’t trade it is more than enough. 

Now, regulators clamping on major cryptocurrency projects is definitely a signal. While some, such as the US SEC’s are reasoning their merits with “investor’s protection,” others such as France and Germany are being a lot more direct. As we mentioned, they openly said that “no private entity can claim monetary power…”

Bitcoin is no private entity and it’s equity-based, meaning that anyone can own the cryptocurrency while, at the same time, it doesn’t belong to any centralized authority. The network is self-sovereign and it functions on its own. However, it does pose a threat to traditional financial systems. It eliminates the middle man, its one of its very purposes. 

Should Bitcoin be adopted on a larger scale, people would transact directly, peer-to-peer, without having to rely on banks or any other authority, for that matter. 

While not speaking of it, the words of the regulators do resonate and should, at the very least, make us think. 

At the same time, it’s entirely possible and within the governmental reach to start focusing on large cryptocurrency organizations and exchanges, including Binance, Kraken, Huobi, Gemini, Coinbase, and whatnot. Regardless of the outcome, this would certainly cause, if not anything else, turmoil amid the retail investor. And it’s important to understand that it’s the retail investor who needs to see the merits of Bitcoin and start using it, in order for the cryptocurrency to truly lift off. 

It’s also not out entirely out of the question that the governments could potentially target bitcoin developers. It’s perhaps not a coincidence that Satoshi Nakamoto, the inventor of the cryptocurrency, chose to remain anonymous.

In any case, should any of these take place, even if Bitcoin is not flat out banned, it could definitely cause a massive crash in its value.

There’s Also A Bright Side For Bitcoin

On the other hand, however, we should also consider the fact that despite the recent clampdown, Bitcoin was seemingly left out of all of it. 

It’s also worth noting that if regulators wanted to issue a flat-out ban on Bitcoin trading, they could have done it already, especially in the US and Europe. We saw that it’s possible in China. 

However, trading in those regions remains widely accessible. The regulations over there are currently aimed at establishing proper KYC and AML frameworks which stem mostly from the fact that legislators hold that cryptocurrencies could be used for illicit activities. 

At the same time, as much as a lot of people don’t want to admit it, Bitcoin, in its current shape and form, could hardly be fit to be used as a mainstream currency. The network on its own won’t be able to handle the influx of transactions and even though there are solutions such as the Lightning Network which attempt to handle this, it’s probably a long way from now. It’s safe to say, though, that developments such as the LN are definitely a step in the right direction towards improved scalability. 

It remains questionable and hard to predict if authorities would like to go against Bitcoin, especially if it becomes fit for everyday usage.

In any case, events such as the ones that we described above, especially when they come from highly-authoritative institutions, shouldn’t be disregarded as they may actually be a precursor for what’s to come.