Crypto , SEC Coins, 2023 and Beyond

In 2023, If we were to believe the headlines, Crypto is dead. Sure. Major exchanges have gone by the wayside like FTX, Celsius, Three Arrows Capital, Gemini taking billions if not trillions in retail investors funds down with them but that's not the entire picture. Like an iceberg, the headlines only tell us a fraction of the story. Crypto is only in its infancy and it's use around the world is just getting started. Crypto is the next big thing. It will overtake everything including banking, currency exchange, sales of commodities, reaching the unbanked, digitization of all assets, fiat currency, social credit scoring, health and wellness, the creation of central bank digital coins or CBDCS, carbon credits, property and asset management even insurance. Everything is going digital on a digital ledger and Crypto is making all that happen. It will transform industries almost overnight. So if Crypto is just beginning to take off why all the FUD i.e. fear, uncertainty and doubt. In 2022, Crypto entered a deep bear market with the fall of Bitcoin from an all time high of $68,789 to below the $19,000. How did it happen? Remember the Colonial Pipeline ramsonware hack in May 2022. Bitcoin crashed soon after the US Justice System announced it's recovery of the ransom paid by Colonial Pipeline Company to hackers who stored there ill gotten Bitcoin in private wallets. Soon after that announcement it became clear to users that Bitcoin was traceable by US officials and Bitcoin was not the haven people thought. It's a silly assumption given that Bitcoin is on a digital ledger. Surely someone in govt circles had access to it but that was never Bitcoin's rep. Since June 2022, Bitcoin, the original coin and strongest by market cap has been moving sideways in price and loosing market  share. The SEC has put on hold the Grayscale's Bitcoin ETF launch.  It has sued exchanges for selling unregistered securities and recently halted the staking by industry exchange, leader, Kraken. causing additional fear in the US community. The SEC seeks to extend its authority to second party vendors like exchanges who sell digital assets. However, US laws and court cases may not be on the side of the SEC. The so called " Howey Test"  to determine whether a contract is a security may not apply to digital assets at all and certainly may not apply to secondary parties like exchanges, sellers and purchasers of digital coins.  In the 1946 case, SEC vs. Howey, the Supreme Court ruled that the contract to sell oranges was a security that violated SEC registration rules. However Howey decision never called the oranges securities. This is the argument the SEC case is making in SEC vs Ripple case filed in Dec 2020. Taking quite the leap in its argument, the SEC seeks to define the digital coin, XRP, as a security itself rather than the sale of the coin as the security which is what Howey established. In a recent hearing in the SEC vs LBRY case the SEC was forced to admit that the exchange of LBRY coins by secondary parties was not impacted by the judges ruling. Only the coin's creator, LBRY violated securities law by its sell of the LBRY coins not the secondary sellers of the LBRY token on exchanges. The Federal District Judge in LBRY has yet to write his opinion but he made it clear, only LBRY the Company was impacted and not secondary market holders like exchanges or individuals who hold and later sell the coins. That of course hasn't stopped the SEC from its rampage against Crypto. Gary Gensler, the Chairman of the SEC, has been criticized for the lack of clarity regarding its authority over digital coins. His meetings with personnel at the now bankrupt FTX corporation in 2022 have many questioning the integrity of the SEC and its interest in protecting investors. Many lost billions while Gensler continued to go after players like Ripple and LBRY who the SEC admits never engaged in fraudulent behavior while FTX clearly defrauded investors while govt officials ignored signs of fraud. The SEC clearly failed in its mission to protect investors. Still the SEC hasn't be stymied by these setbacks. The SEC introduced a rule that may have even more impact on Crypto than its recent enforcement actions. In March 2022, the SEC introduced rules changes that would require registrants with the SEC to include climate related risk and inclusion of information on a company's climate emissions. If approved this rule could threaten a company's ability to acquire market capital in the future. More specifically, energy dependent mined coins could take a major hit and certainly mining operations. Organizations like the EU and IMF also are moving in this direction. Regulators will move green projects forward while older technologies are phased out. Before trillions move into this market, major rules on climate and capital formation will be in play.  If we look beyond the top headlines, it is clear Crypto digitization isn't going anywhere. How the US will move forward is just starting to come into view. The industry will see big changes soon and clarity will come sooner than we think.