The American attack on crypto: Here's why the attack will fail

The US, and in particular the US Securities and Exchange Commission (SEC), continues to crack down on the crypto sector. As hard as the sector is currently being hit, it is unlikely to suffer lasting damage.

What do airplanes and cars have in common? Both have rubber tires. Therefore, should all airplanes and air traffic be regulated in the same way as cars and road traffic? Certainly not. For very understandable reasons, traffic regulations do not apply to air traffic. The two means of transportation and the environment in which they operate are just too different.

In the US, particularly with the US Securities and Exchange Commission (SEC), this logic doesn't seem to quite catch on. Because the most cryptocurrencies share certain characteristics with securities. For example, you can buy them with the intention of price appreciation, which is why, according to the SEC, most cryptocurrencies are also securities. They ignore the differences and focus on the similarities.

The basis for this: the so-called 1946 Howey test, which has been used for more than 75 years to determine what is considered a security in the U.S. and what is not. Dear SEC Chairman Gensler, tradition in all honor, but don't you think the world has changed a bit by now?

Crypto is not porn and gambling industry

When technology companies move to other countries, it is a major economic problem. Knowledge and capital leave one's own jurisdiction and benefit another. The US is not exactly known for welcoming or readily allowing such migration.

Certainly in the porn and gambling industries, the U.S. has in the past exerted pressure to drive unwanted industries out of its own country. The know-how lost in the so-called Operation Chokepoint should be manageable, however.

However, their current Operation Chokepoint 2 is about Web3. This is a very different situation from 2013, when they took action against escort services, New Year's Rockets and tobacco sales.

Fear prevails in U.S.

The US crackdown on the crypto industry can be explained primarily by fears of a loss of US dollar dominance and a general loss of interest. These fears may be partly understandable, but it would be naive to believe that one can turn a blind eye to them.

As previously written: We are no longer living in 1946. Even without the permission of the U.S., the crypto-economy is establishing itself around the world.

China and the EU as beneficiaries

Meanwhile, crypto-friendly representatives in the U.S. should have their mouths watering. While its own regulators lash out at crypto companies, Hong Kong, Coinbase and other industry representatives are invited to discuss future business in China's special economic zone.

Absurd, considering that the atmosphere between the U.S. and China is anything but good. Putting capital and know-how in Chinese hands greatly increases the potential for political escalation.

Especially since it is by no means only Hong Kong that is opening up to the crypto-economy - and not just Hong Kong. This very circumstance is positive: more and more people in the US are no longer willing to support the crypto-attack by Gary Gensler and politicians like Elizabeth Warren. Too many people in the US already own crypto, too many investors and companies are not willing to be led by the nose.

The U.S. will (have to) back down

By the day, the U.S. government's anti-crypto campaign is coming under increasing pressure. Therefore, it is only a matter of time before the crypto opponents' ambitions finally come to nothing.

Even an autocracy like China, which can tackle crypto much more easily than the US, has not really succeeded. The fact that Hong Kong is opening up is a sign that China is little by little moving away from its harsh anti-cryptocurrencies. Especially since they have never completely shut down crypto activities among the population in China.

As a liberal democracy, the hands of the U.S. government are tied many times tighter. Regulations that impose significant restrictions on the crypto sector are therefore hardly sustainable. If it were up to the Republicans, SEC chief Gary Gensler would have long since been removed from office. But even if the Democrats win the election next year, mounting pressure is likely to make a resignation increasingly likely.