In this article we will discuss the potential risks for crypto in the future. We will look at the Privacy Sector as well as the DeFi Sector. Furthermore, there are some risks to Stablecoins and the custody of crypto in general. Before we start with this article keep in mind that this is no financial advice but for entertainment purposes only.
Potential Future Problems for Crypto
Lets start with one of the most controversial things in life: Privacy. Controlling your assets is not enough because even if you are in control of them institutions can control them indirectly through sanctions. Most of the crypto transaction you are doing are publicly viewable. That means that all an institution has to do is to monitor where from and where to these transactions are going. After finding out the information they need, the government could apply pressures to vulnerable points like exchanges or individuals whose identities have been linked to their crypto address. This would discourage further users to interact with these exchanges. The perfect counter to this topic are privacy coins. That is why privacy coins seem to be the public enemy number one to regulators. With this being said, it is undeniable that coins like these will be used to finance immoral activities. On the other hand, even with the normal fiat regulations against such activities these immoral acts could not be stopped. The main reason for that is that human corruption can not be regulated.
These arguments are enough for regulators to force pressure on exchanges. If exchanges want to be publicly listed, they just have to remove Coins like Monero. This is the kind of indirect control that we were talking about before.
The next crypto sector that will be attacked by regulators is the DeFi sector. This is because this sector allows you to participate in money activities without a bank. Due to the fact that the current financial system consists of banks that would be bad news for them. The adoption of DeFi is becoming more and more and it seems like this development brings pressure towards the current financial system. It seems like only a matter of time when the replacement will take place. These institutions wont go down without a fight which can be seen in further regulations. Since not all regulations will be effective with every DeFi protocol this could lead to a more destructive path. The regulatory bodies could go to the companies like UniSwap and force them to integrate a KYC. Another way to regulate the crypto space, especially the Proof of Stake Space, would be to buy up enough voting power and demand a KYC or even worse measures.
Another possible way of the governments to fight crypto is to fight Stablecoins. Most of the crypto trading volume is happening against USDT and USDC. This concern is present in many countries for months. This is because these Stablecoins are linked to the U.S. Dollar. This would mean that further adoption of these Stablecoins in countries where the U.S. Dollar is not the primary currency would lead to a dependence of the economy to the U.S. dollar and with it to the U.S. economy. It is understandable that a lot of countries would want that to happen. The midterm solutions for this is that the governments wants to bring these Stablecoin issuers under its control. This would secure the midterm future. This would be done just to secure the roll out of their own digital currency: CBDC. This is why decentralized Stablecoin alternatives could be interesting in the future.
All of these counter measures seem to be not so bad. This would be great wouldn’t the government also targeting the crypto custody. This is one of the reasons why should always withdraw your crypto from centralized exchanges to your own wallet. If the government wants to ban your exchange you will no longer have the ability to reach your crypto and this is why all of your funds will be lost. Furthermore, there are custodial plans that will not allow you to withdraw your crypto anymore. This would mean that the governments would have more power over the proof of stake coins which would allow them to control it more. Because of these factors, regulators can make a similar order that they made a few years ago when they prevented people of holding gold to secure the stability of the economy. If this would happen to crypto it would be pretty easy to enforce since all of the crypto trading is transparent.
Conclusion
It is a real possibility that such things could happen. However, I don’t see things like these happen in the foreseeable future. Especially not if the crypto adoption will continue to rise. The main point here is that if enough people are using crypto and believe in the projects such regulations could be met by a great resistance. What do you think? Will the crypto space fight all of these regulations? With this being said, I am always happy about feedback!
Published by ga38jem on
Publish0x|LeoFinance|Steemit|read.cash
On 18th October 2021
Sources:
https://www.ledgerinsights.com/anti-money-laundering-has-less-than-1-impact-on-crime-at-what-cost/
https://www.sygna.io/blog/sec-investigates-uniswap-whats-next-for-defi-regulation/
https://www.reddit.com/r/Gold/comments/nkrtkl/fdr_executive_order_6102_of_1933_the_gold_reserve/
