OmAkaSeA DeFi Lesson 4- Riffs on Risk, Regulation, and the Global Financial System VIP>

By vanassen.eth | understandingadoption | 17 Mar 2023

  How many times have you received a pop up while trying to access a d’app that looks something like this?


   This lesson is relevant; just last month NFT market place had a legendary airdrop, in which every single user who interacted with blur in the last — months received a hefty amount of erc-20 blur governance tokens. There was only one downside for thousands of users of blur’s protocol- users in the United States were not able to claim airdrops.
  To be honest, due to upcoming SEC regulation, and comments made by the regulating body in the past, hardly any airdrops in the cryptosphere these days are claimable in the United States. 
   This trend of barring US users largely began with wallet d’app and DEX aggregator 1inch, in response to some poking and prodding by the U.S. Securities and Exchange Commision.

  As we’ve seen over the last few days, regulatory bodies, starting with the SEC, and now including the New York State Attorney General, are hard on labeling cryptocurrencies, particularly alt coins, including Ether, as securities. 
  If regulators are successful in labeling Ethereum as a security, technically, a lot of hands out there will be guilty of brokering unregistered securities. 😩.

  Protocols such as 1inch and Blur have taken a re/proactive approach to potential SEC regulation by limiting users in the United States from accessing their protocols, therefore, removing themselves from the jurisdiction of the US SEC. 

 As a US user, adhering/ not adhering to these regulations, as well as precautions to take if not adhering, should be part of every crypto users risk management/ opsec.

  Let’s consider a regulation relating to crypto from another avenue: inflation. The US Federal Reserve has printed about 20% of the entire money supply in the last few years; the supply growth is chartered below. (5 year)


  How has this has an effect on crypto? For one, presenting alternative options on the world stage as the world’s number one currency weakens itself. Avoiding the loss of value through inflation is a wealth management principle that applies to everyone from consumer citizens with small portfolio investments and saving accounts, companies with treasuries and larger portfolios, to governments and nations managing sovereign wealth. All of these entities have been enticed to try and use crypto to increase or sustain portfolio value in the wake of mass inflation. 

   Besides crypto protocols under fire for selling unregulated securities, and the fed’s penchant for pumping cash into the economy fueling crypto interest, there is another avenue of regulation that is being presented on the world stage- central bank digital currencies.


   Various entities in the US, such as Federal Reserve bodies and the Massachusetts Institute of Technology, (see my article on Project Hamilton) have funded quite a bit of research into a U.S. CBDC- however, as the world’s leading currency, the United States is leagues behind a good chunk of the rest of the world in regards to implementing a CBDC.


   Although a good deal of progress has been made by regulatory bodies, it’s still frightening how little our regulators know about crypto. The whole FTX affair went right under their nose for years while decentralized protocols were poked and prodded- and as of the last weeks, we have a new regulatory nightmare beginning to unfold with the collapse of SVG and a few other small banks. As the abuse of the banking industry practices start to manifest through the revolving door of the US government’s regulatory bodies and the country’s financial sector, it’s unfortunate that the country must look back to the same flawed regulatory bodies to rescue small entities which have been unfairly affected by poor risk management.

   As the Biden administration assures financial stability despite huge issues, how will crypto be affected? We’re seeing a pump in large cap crypto currencies, BTC is nearing $26,000 per piece-

  The Biden administration certainly wants to generate tax revenue through crypto growth- just earlier this month the Biden administration proposed a tax plan that includes measures to clamp down on wash trading that happens in the cryptosphere for the purpose of accruing tax breaks for “losses” in trading. Although this measure is part of a larger attempt to hold corporate conglomerates more responsible for bigger tax responsibility; these new measures will absolutely have an impact on the every day crypto trader. 
    This is a rapidly changing world, and it’s absolutely essential to keep up to date and understand the regulations that are happening, and how the relate directly and indirectly to the world of digital assets. Even since the original Omakasea lesson was made, alot of changes have transpired in the regulatory world, and alot of events have unfolded that have the people calling for regulation stronger than ever. Does anybody else smell a psyop?





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