This is an opinion editorial by Mickey Koss, a West Point graduate with a level in economics. He spent 4 years within the infantry earlier than transitioning to the Finance Corps.
When one of many Bitcoin Magazine editors reached out to ask what I assumed the FTX collapse meant for bitcoin, my first intuition was merely, “Tick-tock next block.”
But after some reflection I believe it’s laborious to cowl this situation in a one dimensional view.
For no matter cause, my thoughts instantly went to an previous Clint Eastwood film, “The Good, The Bad And The Ugly,” which conveniently creates the proper framing for my ideas on this nonetheless-unraveling predicament.
The Good
If there’s one good factor to come of this situation, it’s the data that centralized exchanges could not truly be your pal in any case. Discussions with (comparatively) regular individuals about self-custody inevitably conclude within the expression of concern that they don’t belief themselves to maintain their personal keys. As Caitlin Long factors out beneath, a giant alternate is probably not all that nice at it both.
Evidently the plenty are catching on. Two days in the past, cryptocurrency information agency CoinTelegraph reported that $3 billion worth of bitcoin left exchanges within the week previous the publication of that on 13 November 2022. If you perceive Bitcoin, you doubtless understand that this is fairly important information and could also be top-of-the-line, if not solely, good outcomes from this complete debacle.
Price suppression through “paper bitcoin” has lengthy been some extent of dialogue in sure Bitcoin circles. The extra individuals who take self-custody, the extra individuals who not solely cut back their counterparty threat of dropping their bitcoin, but in addition cut back the capability for exchanges to situation paper bitcoin IOUs.
Warren Buffet said, “It’s only when the tide goes out, you learn who’s swimming naked.” Self custody permits you to merely sit again and benefit from the present so to communicate.
The Bad
Senator Elizabeth Warren, amongst others, are already calling for “a major crypto bill.” With the collapse of an offshore, unregulated altcoin on line casino, politicians now have a galvanizing second they can leverage to get some issues performed.
“Sen. Elizabeth Warren (D-Mass.) said Tuesday {that a} digital forex invoice should be ‘comprehensive,’ masking shopper protections, anti-cash laundering guidelines and local weather safeguards for crypto mining.”
Senators Cynthia Lummis and Kirsten Gillibrand posit that the shortage of motion on crypto laws over the previous years and months have put the U.S. at a regulatory drawback.
Ironically, one of many crypto payments into account was written with the assistance of FTX.
“The bill — introduced by Senate Agriculture Chair Debbie Stabenow (D-Mich.) and Sen. John Boozman (R-Ark.) — is going through scrutiny within the wake of the FTX collapse as a result of the corporate was a serious lobbying power behind the laws. SEC Chair Gary Gensler has stated the proposal is ‘too mild-contact.’“
While U.S. regulation would offer some probably a lot-wanted readability for establishments, a rushed bundle to deal with an emergent scenario could lead to an finish product that is lower than optimum for the markets writ massive. My hope is that legislative gridlock will assist to gradual the method down to facilitate a extra deliberate and completely thought-about piece of laws.
The Ugly
BBC News reported on the day of this writing that over a million people and businesses are now owed cash by FTX. With the declaration of chapter, it is unclear who will receives a commission again, if anyone, and simply how a lot cash they will truly get again.
While it’s simple to criticize cryptocurrency token gamblers and day merchants for not taking possession of their cash, the image is extra advanced than that. I’ve family and friends who had been involved with self custody and held their belongings at BlockFi. Their cash are now frozen in limbo, uncertain when they will probably be ready to withdraw — if ever.
The fallout from FTX is nonetheless unraveling and I’m positive there will probably be much more collateral injury unveiled within the coming weeks.
Stay Humble And Stack Sats
While it’s simple and probably therapeutic to dunk on the unethical and probably criminal activity from FTX and SBF, I’d urge Bitcoiners to keep humble.
It’s conditions like this that breed the following technology of self-custody bitcoin maxis. We want to take this chance to lead and to educate.
As I’ve written already in previous items, I narrowly averted dropping every little thing to the Celsius collapse earlier this yr, simply months earlier than I began writing for Bitcoin Magazine. Sometimes we simply don’t know what we don’t know. Help them see the sunshine.
This is a visitor put up by Mickey Koss. Opinions expressed are solely their personal and don’t essentially mirror these of BTC Inc. or Bitcoin Magazine.
