G20 Summit Proposes To Adopt, Regulate and NOT Ban Cryptocurrency

From reading various news articles I’m going to summarize what I think are the few key take aways from the G20 summit in Buenos Aires, Argentina.

I’ve simplified these into two points although they could have been broken down I think it really boils down to two key conclusions.

Cryptocurrency Should Be Adopted

The G20 agrees that cryptocurrency is part of a transition to digital economy and that eventually fiat (cash) will die.  They also recognize the power of cryptocurrency to bring finance and banking to those who normally wouldn’t have had access.  In a way it is gratifying that they are essentially saying between the lines that cryptocurrency and being your own bank are a good thing for everyone.

I also think it is an act of desperation and I will get more into that in my conclusion.

Cryptocurrency Must Be Regulated

There were several discussions regarding the regulation of cryptocurrency.  As we can see and as I suspected, the main drive is to control and tax cryptocurrency.  They want rules around it so that they aren’t cut out of taxes and control as a middleman.  A strong focus was put on preventing criminal activity and money laundering (you know stuff that NEVER happens with our current financial system).

Why have they adopted this position?

I think it’s natural because as I’ve said companies and people will move to whatever country is friendly to them.  It is almost an act of desperation because I think regulators can see cryptocurrency could head underground and out of the reach of any regulators if they keep cracking down.  I am in no way equating cryptocurrency with piracy or illegal activity but I will say this a similar thing that happened in the days of filesharing such as Napster and Limewire etc… Authorities didn’t understand the new economy was digital and that people wanted to download digital copies of their favorite songs and videos.  Because that void was never filled by the RIAA and MPAA, piracy was rampant and their crackdowns only increased it.  Initially piracy was largely underground but then Bittorrent came out as a decentralized filesharing platform and it has not only made the problem worse but virtually unstoppable.

Cryptocurrency with money being at stake I think would become even larger if the crackdowns continue.  Cryptocurrency would then largely be traded directly without the involvement of fiat if regulators, governments or exchanges (such as Bittrex who recently moved overseas to Malta because they offered them a better deal than the threats they were receiving in the USA).

If Venezuela, Russia or China is more friendly in the end people will move their business and crypto to whatever country they trust.  This can happen in an instant so, really, the regulators should treat the relevant parties well or they can pack up with all of their money.  There is no option to “freeze their accounts” for political reasons like the days of the past.

The rough ride is probably far from over as there will be reasons that governments and regulators may make decisions that are contrary to the G20 logic but I think in the end, reason will win out.

NEM Gives Up Chase for $500M USD in Stolen Coins

For no apparent reason NEM has given up the chase for these coins.  In all fairness I don’t think it was ever their issue, the stolen coins were the fault of the Coincheck Exchange’s security and not due to any flaw in the NEM client or network side.  Of course naturally they were interested but one bold prediction is that “hackers would not be able to launder the coins due to lack of liquidity”.  I am not sure if the NEM developers really believed that or if they thought heat on the exchanges would dissuade or slow the thieves down.  I suspect they exchanged the NEM for other coins and then sold them back again clean through multiple exchanges.

I would say this isn’t bad for cryptocurrency because bank heists occur each day and nothing stops one from spending or exchanging the money in real life.  It’s really no different than the initial fears of “e-commerce sites were hacked” just as real life stores have theft and holdups everyday.  It is just a matter of mitigation whether physical or virtual.

But with that aside NEM clearly said they were ending the chase and wouldn’t say much more due to the “sensitivity of the investigation”.  This is something I find a little strange, is it that they did find something but the authorities have forbidden them from disclosing it?

Was this an inside job on the part of Coincheck in Japan or was it something else explosive that they found?  Could it have been a rival currency, bankers or government behind the hack?  Anything is possible and speculation will rightfully run abound until more details emerge.