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We're witnessing a crypto repeat of the 2008 mortgage crisis. Hoocoodanode v.2021 Where are the federal regulators in all this? As silly as it sounds, at som

We're witnessing a crypto repeat of the 2008 mortgage crisis. Hoocoodanode v.2021 Where are the federal regulators in all this? As silly as it sounds, at some point we're going to have "investors" crying for restitution over money they lost in shitcoin ICOs, fart NFTs, and the crypto shadow banks described in the article.

wayoutthere 5y ago
Except this “crisis” won’t take down the larger economy since people can’t live in crypto. There was always a reasonable guarantee that the housing market would come back as the underlying assets had real world value in their own right, but the same is not true of a post-bubble crypto market.
baby 5y ago
As long as they are classified as highly-risky assets, I don't see the problem. The problem of 2008 was in mislabeling highly-risky assets as OK assets.
- xxs 5y ago
  Oh, if they classify them as any assets, they would be fully regulated.
  - hackingforfun 5y ago
    It's likely that the upcoming Bitcoin ETF was approved because it is based on Bitcoin futures [1], and since there is already an established regulatory framework for those, under the jurisdiction of the CFTC, it was allowed. The CFTC also said, in 2019, "virtual currencies, such as Bitcoin, have been determined to be commodities under the Commodity Exchange Act (CEA)" [2]. They also fined Kraken for offering margin to clients, but "failing to register as a futures commission merchant" [3]. It appears the SEC also has jurisdiction over certain cryptos that have been determined to be securities as well, since they have raised several cases for those [4, 5, 6, 7]. The IRS also considers virtual currencies to be property [8]. Based on this, there is already regulation and asset classification already going on, although I do think it would be great to have more clarity and agreement between the different regulating bodies, regarding crypto, in the US. For now, maybe it's just that some cryptos aren't considered securities until they are called out to be, and the rest would be considered commodities, at least until we hear more about this from regulators. [1] https://www.cnbc.com/2021/10/15/bitcoin-etfs-may-finally-make-their-debut-sort-of.html https://www.cnbc.com/2021/10/15/bitcoin-etfs-may-finally-mak... [2] https://www.cftc.gov/sites/default/files/2019-12/oceo_bitcoinbasics0218.pdf https://www.cftc.gov/sites/default/files/2019-12/oceo_bitcoi... [3] https://www.cftc.gov/PressRoom/PressReleases/8433-21 https://www.cftc.gov/PressRoom/PressReleases/8433-21 [4] https://www.sec.gov/enforce/33-10715-s https://www.sec.gov/enforce/33-10715-s [5] https://www.sec.gov/news/press-release/2020-262 https://www.sec.gov/news/press-release/2020-262 [6] https://www.sec.gov/news/press-release/2020-338 https://www.sec.gov/news/press-release/2020-338 [7] https://www.sec.gov/news/press-release/2021-172 https://www.sec.gov/news/press-release/2021-172 [8] https://www.irs.gov/businesses/small-businesses-self-employed/virtual-currencies https://www.irs.gov/businesses/small-businesses-self-employe...
JumpCrisscross 5y ago
> Where are the federal regulators in all this? We're still building consensus. This is a multidimensional policy space; I doubt any single person knows even what all of those dimensions are. It's a type of problem our federal system of government excels at solving, albeit slowly. States will experiment with policy. Down the road we can consolidate their lessons. Only thing to keep an eye out for, in the interim, are systemic risks.
joe_the_user 5y ago
A bubble bursting has to penalize someone. 2008 saw Lehman Bros destroyed and the larger players supported. Letting crypto investors suck it and supporting the rest of the market seems pretty politically defensible. Virtually all crypto investors have been warned - but yes, they'll complain.

wayoutthere 5y ago

Except this “crisis” won’t take down the larger economy since people can’t live in crypto. There was always a reasonable guarantee that the housing market would come back as the underlying assets had real world value in their own right, but the same is not true of a post-bubble crypto market.

baby 5y ago

As long as they are classified as highly-risky assets, I don't see the problem. The problem of 2008 was in mislabeling highly-risky assets as OK assets.

xxs 5y ago
Oh, if they classify them as any assets, they would be fully regulated.
- hackingforfun 5y ago
  It's likely that the upcoming Bitcoin ETF was approved because it is based on Bitcoin futures [1], and since there is already an established regulatory framework for those, under the jurisdiction of the CFTC, it was allowed. The CFTC also said, in 2019, "virtual currencies, such as Bitcoin, have been determined to be commodities under the Commodity Exchange Act (CEA)" [2]. They also fined Kraken for offering margin to clients, but "failing to register as a futures commission merchant" [3]. It appears the SEC also has jurisdiction over certain cryptos that have been determined to be securities as well, since they have raised several cases for those [4, 5, 6, 7]. The IRS also considers virtual currencies to be property [8]. Based on this, there is already regulation and asset classification already going on, although I do think it would be great to have more clarity and agreement between the different regulating bodies, regarding crypto, in the US. For now, maybe it's just that some cryptos aren't considered securities until they are called out to be, and the rest would be considered commodities, at least until we hear more about this from regulators. [1] https://www.cnbc.com/2021/10/15/bitcoin-etfs-may-finally-make-their-debut-sort-of.html https://www.cnbc.com/2021/10/15/bitcoin-etfs-may-finally-mak... [2] https://www.cftc.gov/sites/default/files/2019-12/oceo_bitcoinbasics0218.pdf https://www.cftc.gov/sites/default/files/2019-12/oceo_bitcoi... [3] https://www.cftc.gov/PressRoom/PressReleases/8433-21 https://www.cftc.gov/PressRoom/PressReleases/8433-21 [4] https://www.sec.gov/enforce/33-10715-s https://www.sec.gov/enforce/33-10715-s [5] https://www.sec.gov/news/press-release/2020-262 https://www.sec.gov/news/press-release/2020-262 [6] https://www.sec.gov/news/press-release/2020-338 https://www.sec.gov/news/press-release/2020-338 [7] https://www.sec.gov/news/press-release/2021-172 https://www.sec.gov/news/press-release/2021-172 [8] https://www.irs.gov/businesses/small-businesses-self-employed/virtual-currencies https://www.irs.gov/businesses/small-businesses-self-employe...

JumpCrisscross 5y ago

> Where are the federal regulators in all this? We're still building consensus. This is a multidimensional policy space; I doubt any single person knows even what all of those dimensions are. It's a type of problem our federal system of government excels at solving, albeit slowly. States will experiment with policy. Down the road we can consolidate their lessons. Only thing to keep an eye out for, in the interim, are systemic risks.

joe_the_user 5y ago

A bubble bursting has to penalize someone. 2008 saw Lehman Bros destroyed and the larger players supported. Letting crypto investors suck it and supporting the rest of the market seems pretty politically defensible. Virtually all crypto investors have been warned - but yes, they'll complain.