Bitcoin is down another $200 at press time, meaning it’s fallen by about $600 over the past 48 hours. What could be going on that we’re not seeing?
Bitcoin Is Set to Become More Regulated
It could be that bitcoin and other cryptocurrencies are reacting to the news that more legislation is heading their way. This week, Treasury secretary Steven Mnuchin explained that hardcore regulations are about to hit the cryptocurrency arena very soon, and while they’re eager to allow cryptocurrency trading to continue, they aren’t willing to take any chances with criminals.
In an interview, he stated:
We want to make sure that technology moves forward but, on the other hand, we want to make sure that cryptocurrencies aren’t used for the equivalent of old Swiss secret number bank accounts.
One of the major problems with bitcoin and its altcoin cousins is that they still drive too much criminal activity. Many illicit actors believe crypto to be more private than it really is and will often utilize crypto for money laundering purposes or to wash their money clean. This has given rise to dark web activities in which crypto is used to purchase drugs, guns or other illegal goods.
A recent case involved an Ohio resident named Larry Harmon, who ran an illegal crypto and bitcoin mixing business known as Helix. The business is believed to have been in operation for nearly six years, and for many lawmakers, this is proof that crypto activity is not regulated enough. It is believed that Harmon may have washed as many as 350,000 bitcoin units clean, and that the amount of illicit funds that made their way through his operation’s walls was $3.5 billion.
In addition, Harmon has also been charged of trading drugs for bitcoin.
Among those echoing the sentiment of Mnuchin is Neel Kashkari, the Minneapolis Fed president. In a statement, he explains:
The reason that the dollar has value is because the U.S. government has a legal monopoly on producing the dollar. In the virtual currency and cryptocurrency world, there are thousands of these garbage coins out there. Literally, people have been fleeced for tens of billions of dollars, and finally the SEC [Securities and Exchange Commission] is getting involved in cracking down on this.
Is It Weaker Than We Think?
Both he and the Department of Justice (DOJ) have stated that cryptocurrencies simply don’t possess the same properties as any stable unit of fiat, and as such, lack the strength and stamina to really go anywhere in ten years.
As a means of working around some of the incoming regulatory tactics in the United States, many crypto companies have simply picked up and moved to more digital currency-friendly areas such as Switzerland. Among the ventures to move here is Libra, the new cryptocurrency project brought forth by Facebook.