What’s Government’s Long Game for ICOs and Digital Currencies?
As the market cap of digital currencies rocketed higher last month, a multitude of warnings surrounding ICOs and securities offerings were issued by regulatory agencies around the globe.
The timing of the releases, and subsequent crackdown by China — which has made ICOs technically illegal — perhaps gives an insight into possible attack vectors governments may employ to stem the flow of money into the cryptocurrency economy.
Bitcoin is still legal in China. But ICO is illegal now.
— Jihan Wu (@JihanWu) September 4, 2017
If your thinking is this way inclined, it’s interesting to note that back in June, the IMF released a paper on cryptocurrency and what they labelled as “Distributed Ledger Technology”, or DLT. The paper discussed the disruptive nature of an open source blockchain and compared it to a permissioned DLT. It read:
“These open schemes (that underlie Bitcoin, for instance) could be very disruptive if successfully implemented. By contrast, in permissioned DLTs, the validation process is controlled by a pre-selected group of participants (“consortium”) or managed by one organization (“fully-private”), and thus serve more as a common communications platform.”
This gives the reader an insight into the thinking and probable future plans of the global elite. Reading between the lines, it stands to reason that the IMF would support a permissioned ledger controlled by the few, in opposition to the model that would disrupt the way the current system operates.
The report states very clearly that a move towards digitally-issued national currencies is being considered:
“[Authorities] need to ensure that trust is maintained in an evolving financial system … policy options to support open networks could be considered. In doing so, central banks may need to assess costs and benefits of increasing access to their settlement systems or offering digital national currencies.”
Government Will Create Digital Currencies, Ban Others
Notable gold bug and incessant Bitcoin troll Jim Rickards noted that:
“This paper should be viewed as the first step in the IMF’s plan to migrate its existing form of world money, the special drawing right or SDR, onto a DLT platform controlled by the IMF.”
It is one of the reasons, along with the prevalence of fraud and current ‘bubble mentality’, that Rickards gives for believing the threat posed by Bitcoin will be eliminated. Even though a closed source blockchain is closer to a SQL database than the open source Bitcoin blockchain, Rickards believes the IMF will use its private, permissioned “DLT blockchain” as a trojan horse that ushers in an age of digital cash and ubiquitous monitoring of payments.
It's certainly coming. So is an IMF crypto. That's my point. When state power co-opts crypto their next move is to ban non-state crypto. https://t.co/4FDRQDQByA
— Jim Rickards (@JamesGRickards) September 4, 2017
The systemic power of the global elite and the IMF informs the basis of Rickards’ economic thesis for the next global recession. the IMF will step in to issue its own kind of “world money” as no government will be able to take up the slack — as the U.S. Fed did in 2008. The IMF has the only “clean” balance sheet left (governments and central banks are tapped out after essentially inheriting the debts of the big banks).
This will lead to the localizing of all currencies (including the U.S. dollar) and will operate in conjunction with plans to ban cash and make digital payments compulsory. Now, Rickards has added that the IMF will incorporate a permissioned DLT ‘blockchain’ to achieve this end.
Was Bitcoin Government-Controlled From the Start?
It would be the ultimate vindication for any Bitcoin conspiracy theorist who believed that the NSA deliberately released Bitcoin into the wild in order to prime the masses for the autocratic slide into digital everything. If true, the assets of the many will be monitored by the few — a dystopian nightmare — and the unelected leaders at the IMF are positioning themselves to be front and centre of any new paradigm.
The IMF’s paper “Fintech and Financial Services: Initial Considerations” said:
“Fintech is an international issue. With the blurring of boundaries among entities, activities, and jurisdictions policymakers need to consider implications for common standards and legal principles, to the extent that they align with national priorities. International cooperation will therefore be essential, and the IMF is well placed to play a significant role.”
What we would expect to see if this were accurate is increasing interest by big players in the financial sector. The creation of the whole ‘Blockchain not Bitcoin’ meme, the R3 project, and the latest news of major banks teaming up to create “Utility Settlement Coin” (USC), may indeed solidify the theory.
Taking this into account, today’s announcement of ICO regulation by the Chinese authorities may be the first shot across the bow in further co-operation. The PBOC’s statement was preceded by statements from Israel and increased mention of the ICO phenomenon by the SEC. As with most things, in an economic sense, once the SEC plays its hand, the rest of the world will follow.
The only country that seems to have bucked that trend is Russia, who has reversed its opinions on cryptocurrency over the last few months. Perhaps the political landscape is simply a bigger fractal of the economic one.
Chinese ICO Ban Could Actually Be Good for Cryptocurrency
Still, some see the China ICO ban as a positive – the translation suggests a ban on ICOs, not cryptocurrency — while the market has dumped almost every kind of crypto asset, regardless of function or platform.
— WhalePanda (@WhalePanda) September 4, 2017
It remains to be seen whether this ICO ban is just a harbinger for what is to come, for both Bitcoin and other cryptocurrencies. Is this part of a dystopian “long con” by the likes of the IMF, or simply part of the long anticipated government crackdown, where regulatory agencies finally do their job?
These questions are yet to be answered, but it will be interesting to see whether or not this current fear based pullback is just a pause — or if it translates into the beginning of a new bear market.
What do you think the long game is for cryptocurrencies? Let’s hear your thoughts.
Images via Pixabay