Last week, following the announcement by Donald Trump that he would nominate Paul Atkins, a cryptocurrency advocate, as the head of the Securities and Exchange Commission (S.E.C.), the value of Bitcoin surpassed one hundred thousand dollars. This declaration led to a surge of excitement among crypto enthusiasts, reminiscent of the dot-com boom and its subsequent crash that occurred over two decades ago.
“There was the same giddy excitement, the same predictions that prices could still go higher, much higher, and the same uneasy feelings among some longtime market participants and observers, me included,” recalls a veteran market observer.
The Impact of Political Influence on Crypto Markets
Crypto investors, entrepreneurs, and donors who contributed hundreds of millions of dollars to politicians in favor of cryptocurrency ahead of November’s election have ample reason to be elated. Their investment in a political victory for Trump and the defeat of some prominent crypto skeptics, including Democratic senator Sherrod Brown of Ohio, has already borne fruits.
The Role of the S.E.C. in Crypto Regulation
The S.E.C. is the nation’s leading investor-protection agency. Under the leadership of Gary Gensler, nominated by President Joe Biden in 2021, the agency adopted an aggressive approach towards an industry that Gensler described as laden with fraud and scams. The S.E.C. filed lawsuits against several crypto firms, including the crypto exchange Coinbase and the digital-payment network Ripple.
The Potential Changes Under Paul Atkins
However, if Atkins, a conservative lawyer who formerly served as an S.E.C. commissioner during George W. Bush’s Administration and now co-chairs the Token Alliance, a crypto lobbying group, takes over, the agency’s ongoing lawsuits and other cases could presumably be suspended. Moreover, the S.E.C. would likely adopt a more friendly approach towards issuers of crypto assets, such as currencies and tokens.
“For crypto assets, the fundamental rules that have protected investors for decades are going to be greatly weakened, and the industry is going to be allowed to expand with very little regulation or accountability,” warns Dennis Kelleher, the president of Better Markets, a Washington-based financial-reform group.
The Future of Crypto: A Paradigm Shift
Crypto leaders hailed Atkins’ nomination as a landmark. Michael Novogratz, the founder and chief executive of Galaxy Digital, told Reuters, “We’re witnessing a paradigm shift. Bitcoin and the entire digital asset ecosystem are on the brink of entering the financial mainstream.”
Despite comparisons to the dot-com boom of the late 1990s, speculative digital assets such as Bitcoin, Dogecoin, and the crypto tokens issued by the Trump family’s new venture, World Liberty Financial, cannot be directly compared to the startups of the nineties. However, the factors that underpin speculative episodes—new technology, efficient communication, the active participation of the financial industry, and a supportive policy environment—are all present in the current crypto landscape.
Source: www.newyorker.com
