The biggest risk factor for many projects in 2021: the inevitable SEC regulation


 317 total views

On December 29, the long-heard news in the market finally settled, and Coinbase officially announced that it would suspend XRP trading on January 20, 2021.

So far, under the SEC (United States Securities and Exchange Commission) wielding a big stick, mainstream trading platforms such as Coinbase, Bitstamp, Binance US have announced that they will delist XRP trading, and XRP seems to be entering a difficult time.

01 XRP, which was targeted by the SEC, has been removed

2021许多项目最大的风险因素:无法回避的SEC监管 The domino effect is still going on. The storm of all this started on December 22, when the SEC sued Ripple and its executives for violating the securities law-illegal issuance of securities.

Since 2013, more than 14.6 billion Ripple coins worth $1.38 billion have been sold in unregistered offerings, but they have not been registered with the SEC. Although it has not yet entered the litigation stage, the SEC’s investigation is definitely negative for the market, and Ripple also reacted strongly to this.

It issued a statement against the U.S. Securities and Exchange Commission (SEC) in its lawsuit, stating that it will respond within a few weeks to resolve the unsubstantiated allegations: it will defend itself in court to ultimately make the U.S. cryptocurrency industry better Clear.

The SEC’s action is not only related to Ripple, but also an attack on the entire encryption industry in the United States. It has affected countless XRP retail holders who have no connection with the company and brought more uncertainties to the market.

Even if the SEC sues Ripple for illegally selling XRP and the profit-making first pre-trial meeting will be held on February 22, 2021, the incident continues to ferment, and Coinbase even received a class action lawsuit from customers for “illegal” sales of XRP.

It is also affected by this that mainstream trading platforms such as Coinbase, Bitstamp, and Binance US have successively announced that they will delist XRP trading. Bitwise Asset Management’s Bitwise 10 encrypted index fund and other crypto asset management, the company has also Liquidate its XRP position.

2021许多项目最大的风险因素:无法回避的SEC监管 In the future, if the “war” between the SEC and Ripple continues, more trading platforms will inevitably delist XRP. Therefore, XRP at the secondary market level has fallen all the way from its previous highs, and once fell below $0.2, a posture that the general trend is gone. .

So, after being targeted by the SEC, is there really no solution?

02 XRP is not the first, and it is destined not to be the last


In fact, among many digital currency projects, XRP is not the first to be targeted by the SEC, and it is destined not to be the last.

The most familiar thing is undoubtedly the EOS incident last year, but it was also targeted by the SEC. However, unlike the bad situation where XRP was eventually delisted by multiple trading platforms, EOS adopted a very flexible approach to deal with the problem. It was subdued before large-scale fermentation.

On September 23, 2019, the SEC and reached a settlement. agreed to pay a civil penalty of US$24 million (the fine accounted for 0.58% of its total Token financing) to settle the SEC’s unregistered The accusation of Token financing and issuance also granted it important immunity for future business.

This not only means that and EOS have come to a successful end on the road to compliance, and the overhanging policy “Sword of Damocles” has also been temporarily lifted, and it has also been trapped from another perspective. Projects similar to the allegations of dilemma provide ideas-a positive attitude and clear penalties .

Tezos made another confirmation on this. On March 23, 2020, Tezos announced that after a two-year court battle, it chose 20 million US dollars to resolve the litigation issues.

As the first public Token financing project in history and the largest public Token financing project before EOS, Tezos passed the sensational first Token financing issuance in the fall of 2017, and achieved $232 million in revenue.

2021许多项目最大的风险因素:无法回避的SEC监管 “The SEC will be very short of money next year (2020).” EOS and Tezos’s “spending money for safety” seems to have also proved the SEC’s law enforcement thinking-the historical financing of the project party, and there are legal regulatory handles. There is a consensus on the market.

As long as you make more shots, you can hit a hit, and once you choose a shot, it must be a well-known (rich) project that can be heavily punished. Therefore, Ripple, which “founder sells tokens to become the richest man”, seems to be targeted by the logic that makes sense.

From this perspective, it seems that there are not too many projects on the market that satisfy both “problematic + rich” projects. Who will become the next hunting target of the SEC?

Just recently, the SEC issued an asset freeze order to the crypto hedge fund Virgil Capital, accusing Qin, the founder of the fund, of misleading investors by investing their money in an encrypted trading algorithm that benefits from price differences between trading platforms. Advantageously, this trading algorithm is used in RenVM “dark node” network fragmentation to process cross-chain transaction orders.

Under the swing of the SEC stick, more project parties are destined to be targeted in 2021, and many “Zhou Yu hits yellow cover” scenes are destined to be repeated.

03 “Supervision” Blockchain

2021许多项目最大的风险因素:无法回避的SEC监管 However, Tether is undoubtedly an “old predecessor” with rich experience and “good track record” when it comes to engaging in a “tug-of-war” with supervision.

As “one of the largest gray rhinos in the crypto world”, Tether received a subpoena from the US Commodity Futures Trading Commission (CFTC) in 2017, but it did not stop issuing new USDT.

Later, the New York Attorney General’s Office (NYAG) came up with actual investigation results, claiming that Bitfinex used Tether to provide loans for itself to cover up its $850 million financial loophole, but USDT is still “additional issuance, additional issuance, and additional issuance.”

2021许多项目最大的风险因素:无法回避的SEC监管 Even after encountering the crisis of confidence that “short positions were cut” on October 15, 2018, USDT still survived with the attitude of “big to fail”, and even crazy additional issuance in 2020, further bound to the depth of the market .

On December 30, the CEO of CryptoQuant, an encrypted data website, stated that if the next target of the SEC is Tether, it will deal a serious blow to this bull market.

The current market relies heavily on USDT. In this context, the recent fire of algorithmic stablecoins seems to provide another way of thinking:

Stablecoins with mortgage-anchored models like USDT still rely on centralized issuers (even the second-generation stablecoin DAI has to sacrifice decentralization to a certain extent and introduce centralized assets into mortgage assets to ensure stability Sex).

This is doomed to its vulnerability in the face of supervision. For the decentralized encrypted market, stablecoins that can be “supervised” to a certain extent have gradually become rigidly needed.

Compared with the traditional USDT, USDC, DAI and other different types of stablecoins, the biggest difference between algorithmic stablecoins is that they completely abandon the mortgage anchoring model, but only establish a monetary system through market supply and demand. There is no specific Centralized issuer.

Because of this, the algorithmic stable currency may also represent a specific market demand from the perspective of “deregulation”-outside the mainstream market currently occupied by USDT and other mainstream markets, the long tail effect gradually erodes the vacated market share.

However, the current market value of ESD is less than 400 million US dollars. The market value of the overall algorithmic stable currency is very small, and it is only a small group of experiments. Whether it can really challenge the centralized stable currency is still unknown.

04 Summary

As a technological innovation with financial attributes, encrypted digital currency projects benefit from their own permissionless and high liquidity characteristics. From an investment perspective, they themselves are high-risk behaviors.

But up to now, to be honest, the entire market is still in a state of chaos, and the identification and investment of projects is completely a game of “big and small”-not only the project vision is free to play, even the progress of subsequent development is also almost dependent The “personality” of the project party has no effective supervision and restriction.

This is also the root cause of the chaos and chaos in the industry. However, it is understandable in the early stage. After all, many disruptive innovations are on the edge of gray in the early stage.

The encrypted digital currency market and blockchain will further expand in size in the future and gain wider recognition and participation. Sooner or later, a certain degree of supervision and regulation will be a matter of time. “Supervising” the blockchain may become the norm in the future.

As the industry runs off and scams are chaotic, “regulating” the blockchain will become a matter of time. What do you think of this view?