**RT @malekanoms:**
One of the requirement of being the global reserve currency and having the most dominant capital markets is an expectation of predictability.
For decades, people have trusted the dollar and US debt/equity markets because they trust our monetary policy and legal system, and the political system that ultimately controls both.
But this is starting to change, ironically (or perhaps, appropriately) as a response to crypto. First, there was Chokepoint 2.0, a sad situation where US banking regulators compromised the entire system to drive out a small industry.
I still think the joint memo that the Fed, FDIC, etc put out warning banks about crypto back in January is one of the most remarkable govt documents in recent memory. Perhaps for the first time, the stewards of a banking system went out of their way to instill fear in depositors. This is something you never do, given the fragility of banking. There's a reason why every president or Treasury secretary has always said "the banking system is sound" even when it wasn't.
Chokepoint 2.0 started the crisis. They went out of their way to let Silvergate fail because it was a crypto bank. This resonated with SVB depositors, some of which were VCs with some crypto exposure. Then they killed Signature while still solvent because it too was a crypto bank, sending a powerful message to bank shareholders everywhere.
Obviously there were other factors, and perhaps the duration mismatch issues would have taken down some of these banks anyway, but the Feds lit the match.
Next up is the politicization of American capital market regulators, mainly the SEC. I won't rehash all the details here but all anyone has to do is watch Gensler testify in congress (and refuse to say whether ETH is a security) or listen to the Prometheum guy rant about how regulations that result in his ATS not being able to trade a single coin are awesome to see how much we've lost the thread.
The ramifications go far beyond crypto. The refusal to allow a simple spot ETF calls into question every other ETF the agency has approved or denied. The proposed new custody rules and exchange definitions impact many corners of finance beyond crypto. Our historic system of federalism where state regulators also get a say is under assault.
Gensler is smart enough to know that most of what he's trying will be shot down by the courts or overturned by congress -- long after he's gone. But he's doing it anyway. That's the distressing part. A premiere capital market regulator with a multi-decade track record of credibility is being dragged through the mud to serve one man's personal or political ambition.
All of this is going to register globally. If the world doesn't trust our Fed, FDIC and SEC, then it won't trust our money or capital markets.
It also opens the door to competition. "Look at those chaotic Americans and their willingness to hurt themselves to stop progress" our enemies will say. "Do you really want to do business with them"?
None of this means that dedollarization is imminent, or that foreigners are going to start boycotting our capital markets en masse. But it's a lurch forward in a distressing direction, one worsened by things like sanctions.
The problem for the rest of the world is that there is no clear alternative to America.
Or rather, not in the traditional sense. China has capital controls and an even more unpredictable political system. The EU is an unstable union and the UK Brexited. Dubai is too small and the BRICs have their own problems.
So what's left? How about a decentralized, permissionless and borderless financial system where the rules are enshrined in code? Or currencies with predictable and apolitical monetary policy? Or total transparency of the kind the world has never seen?
Seem's hyperbolic? Then stay tuned. There's a false belief in many political systems that dramatic change to the financial order can never happen.
But in the domain of money, punctuated equilibrium has always been the rule, not the exception.
https://nitter.moomoo.me/malekanoms/status/1670079697382780931#m
Brian Armstrong 🛡️ / @brian_armstrong (RSS Feed) /
npub1jj…6h3zc
2023-06-17 14:43:23
Author Public Key
npub1jj9575693w997wqncd3daxp8alpxs9uamu9k03xtrymtaxxfzfkst6h3zcSeen on
wss://relay.nostr.bandPublished at
2023-06-17 14:43:23Event JSON
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"content": "**RT @malekanoms:**\n\nOne of the requirement of being the global reserve currency and having the most dominant capital markets is an expectation of predictability.\n\nFor decades, people have trusted the dollar and US debt/equity markets because they trust our monetary policy and legal system, and the political system that ultimately controls both.\n\nBut this is starting to change, ironically (or perhaps, appropriately) as a response to crypto. First, there was Chokepoint 2.0, a sad situation where US banking regulators compromised the entire system to drive out a small industry.\n\nI still think the joint memo that the Fed, FDIC, etc put out warning banks about crypto back in January is one of the most remarkable govt documents in recent memory. Perhaps for the first time, the stewards of a banking system went out of their way to instill fear in depositors. This is something you never do, given the fragility of banking. There's a reason why every president or Treasury secretary has always said \"the banking system is sound\" even when it wasn't.\n\nChokepoint 2.0 started the crisis. They went out of their way to let Silvergate fail because it was a crypto bank. This resonated with SVB depositors, some of which were VCs with some crypto exposure. Then they killed Signature while still solvent because it too was a crypto bank, sending a powerful message to bank shareholders everywhere.\n\nObviously there were other factors, and perhaps the duration mismatch issues would have taken down some of these banks anyway, but the Feds lit the match.\n\nNext up is the politicization of American capital market regulators, mainly the SEC. I won't rehash all the details here but all anyone has to do is watch Gensler testify in congress (and refuse to say whether ETH is a security) or listen to the Prometheum guy rant about how regulations that result in his ATS not being able to trade a single coin are awesome to see how much we've lost the thread.\n\nThe ramifications go far beyond crypto. The refusal to allow a simple spot ETF calls into question every other ETF the agency has approved or denied. The proposed new custody rules and exchange definitions impact many corners of finance beyond crypto. Our historic system of federalism where state regulators also get a say is under assault.\n\nGensler is smart enough to know that most of what he's trying will be shot down by the courts or overturned by congress -- long after he's gone. But he's doing it anyway. That's the distressing part. A premiere capital market regulator with a multi-decade track record of credibility is being dragged through the mud to serve one man's personal or political ambition.\n\nAll of this is going to register globally. If the world doesn't trust our Fed, FDIC and SEC, then it won't trust our money or capital markets.\n\nIt also opens the door to competition. \"Look at those chaotic Americans and their willingness to hurt themselves to stop progress\" our enemies will say. \"Do you really want to do business with them\"?\n\nNone of this means that dedollarization is imminent, or that foreigners are going to start boycotting our capital markets en masse. But it's a lurch forward in a distressing direction, one worsened by things like sanctions.\n\nThe problem for the rest of the world is that there is no clear alternative to America.\n\nOr rather, not in the traditional sense. China has capital controls and an even more unpredictable political system. The EU is an unstable union and the UK Brexited. Dubai is too small and the BRICs have their own problems.\n\nSo what's left? How about a decentralized, permissionless and borderless financial system where the rules are enshrined in code? Or currencies with predictable and apolitical monetary policy? Or total transparency of the kind the world has never seen?\n\nSeem's hyperbolic? Then stay tuned. There's a false belief in many political systems that dramatic change to the financial order can never happen.\n\nBut in the domain of money, punctuated equilibrium has always been the rule, not the exception.\n\nhttps://nitter.moomoo.me/malekanoms/status/1670079697382780931#m",
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