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US Regulators Overreach to Protect US Dollar Supremacy with TON Decision, Will Bitcoin be next?

Lucas Cacioli   May 18, 2020 17:50 4 Min Read

If the last two years have revealed anything about our global monetary system, it is that the US Federal Reserve and President Donald Trump really do not want a competitor to the US Dollar.


The value of Bitcoin, the pioneer cryptocurrency born of the 2008/2009 global financial crisis, has risen dramatically since its inception and it even appears to be maturing into a form of digital gold. In addition, market sentiment towards investment in the coin has now evolved from fringe technology users to mainstream enterprises and everyday investors.

While the general consumer public has been getting comfortable with cryptocurrency, there has always appeared to be a very deliberate effort by the US authorities to stifle any maturation that Bitcoin hopes to see. And it's not just Bitcoin, other digital assets and projects that have even begun posturing to utilize some of their own agency have all been thrown in front of the US Securities and Exchange Commission, and the outcomes seem all but predetermined. 

SEC Commissioner Dissents on Bitcoin Double-Standard

In February this year, US Securities and Exchange Commission (SEC) Commissioner Hester Peirce wrote, that “the Commission applies a unique, heightened standard under Exchange Act Section 6(b) to rule filings related to digital assets” which had never been applied to traditional market offerings.

The SEC Commissioner's dissenting statement came in response to the rejection of Bitwise’s Bitcoin ETF application.

Peirce wrote, "This line of disapprovals leads me to conclude that this Commission is unwilling to approve the listing of any product that would provide access to the market for bitcoin and that no filing will meet the ever-shifting standards that this Commission insists on applying to bitcoin-related products—and only to bitcoin-related products.”

The SEC has rejected all previous bitcoin ETF proposals filed to date.

There Can Be Only One…Telegram Gets the Message

While it tries to keep Bitcoin under wraps, the US Government along with its European Regulator allies has also forced the much-publicized Facebook Libra project to move away from its original plan of a permissionless digital currency towards a coin that would be subject to foreign exchange controls and regulations.

But perhaps the most excessive abuse of power by the US SEC has been the manner in which it recently shot down the Telegram Open Network (TON). It is difficult to see how the US regulators have not over-reached on their ruling and what's more alarming is the lack of backlash towards the regulators by other sovereign nations who have had their own rights encroached. 

Following Telegram abandoning the TON project, the companies CEO Pavel Durov published a long explanation entitled, "What was TON and Why is it Over?" But in summary, Durov explained that the primary reason to abandon the project ultimately came down to the US regulators somehow being able to encroach on the sovereign rights of other nations and dictate where Grams could be distributed for the entire world.

Durov wrote, “Perhaps even more paradoxically, the US court declared that Grams couldn't be distributed not only in the United States, but globally. Why? Because, it said, a US citizen might find some way of accessing the TON platform after it launched. So, to prevent this, Grams shouldn’t be allowed to be distributed anywhere in the world – even if every other country on the planet seemed to be perfectly fine with TON.

The Telegram CEO further reiterated that the US courts are exceeding its own jurisdiction and deciding what is best for the rest of the world and believes that they are exploiting their control over the dollar.

Durov stated, “Sadly, the US judge is right about one thing: we, the people outside the US, can vote for our presidents and elect our parliaments, but we are still dependent on the United States when it comes to finance and technology (luckily not coffee). The US can use its control over the dollar and the global financial system to shut down any bank or bank account in the world.

Trump Plays the Same, but the Game has Changed

With TON basically put down and Libra tamed, it seems only a matter of time before the decision is made to once again re-focus on Bitcoin. Especially, given that the decision will ultimately fall into the hands of US President Donald Trump. 

Last year Trump was quoted in an outburst against cryptocurrencies, “We have only one real currency in the USA, and it is stronger than ever, both dependable and reliable. It is by far the most dominant currency anywhere in the world, and it will always stay that way. It is called the United States dollar!”

While Trump’s state-of-play towards digital assets may be the same, perhaps the game has changed. 

Following his comments last year, Trump now finds himself having to contend with the COVID market downturn as well as China’s unswerving mission to achieve the world's first central bank digital currency (CBDC), or DCEP in their case.

Should China be able to achieve a central bank currency first, it could spell the end of US dollar dominance, particularly within those countries involved in the Belt and Road Initiative, a project spearheaded by China to digitalize the old silk road connecting Europe, Asia, and Africa. 

And finally, given Trump’s push for negative interest rates, the excessive amounts of money printing stimulus, and a world shifting away from Oil consumerism and consequently the petro-dollar: how strong and stable can the US dollar even remain? 

 

Image via Shutterstock
 

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