As panic continues to ripple through the cryptocurrency markets, industry experts and investors alike worry that the latest crypto crash will further disparage the industry in the eyes of Washington policymakers.
Following a rollercoaster 72 hours when $409B worth of the global crypto market cap was wiped out, founder of the Cardano blockchain platform, Charles Hoskinson, hosted a live Twitter spaces call for his 911,000 (and counting) followers where he discussed the current state of the crypto market and its implications on the industry’s future.
"I think we'll probably be waiting until 2025 for real change to occur," Hoskinson told FOX Business. "I have zero faith in the party of Elizabeth Warren and these others that they're actually going to meaningfully influence crypto above and beyond."
The conversation surrounding cryptocurrency in Washington has been largely dominated by both Elizabeth Warren, a fierce crypto critic, and Gary Gensler, head of the Securities and Exchange Commission, who has vowed to crack down on the digital assets space using a "regulation-by-enforcement" approach in an attempt to control the rapidly expanding industry. Earlier this month, the SEC announced it would nearly double its crypto enforcement team, adding 20 new positions to the Crypto Assets and Cyber Unit, bringing the total number of staff to 50.
Today, Gensler doubled down on his view that most cryptocurrencies are indeed securities and need to be regulated under the purview of the SEC. He also caused fresh waves across the industry by suggesting that cryptocurrency exchanges like Binance and Coinbase are trading against their customers, meaning they’re able to obtain intel and take advantage of trades before their customers do.
Elizabeth Warren has also been a staunch critic of crypto, recently stating that investing in cryptocurrencies is a "risky" and "speculative" gamble. Now, many in the crypto space fear the words of the Massachusetts Senator may be starting to ring true.
In the last 24 hours, Bitcoin has fallen back below the $30,000 level, down more than 50% from its all-time high of $69,000 last November. Meanwhile, the price of the so-called stablecoin TerraUSD, or UST, which is designed to maintain a consistent peg to the U.S. dollar, plummeted as low as $0.23 on Wednesday with its sister token, Luna, losing around 94% of its value in the last week.
Right now, Sens. Kirsten Gillibrand (D-N.Y.) and Cynthia Lummis (R-Wyo.) are working together on bi-partisan legislation that could give the crypto industry some type of regulatory clarity.
Hoskinson believes the recent volatility and overall uncertainty in the crypto market will create more support for the new law, but time is running short.
"I do believe this will push the legislative branch to escalate and actually pass a law at some point," Hoskinson told FOX Business. "but unless they move quickly I don't think they have enough political time to be able to actually pass comprehensive legislation before the midterm elections."
Back in March, President Biden signed an executive order asking various government agencies to weigh the pros and cons of implementing a U.S digital dollar, also known as a CBDC, which is pegged to a country’s fiat currency. The study is taking place over 6 months and involves input from both the Federal Reserve and the Treasury Department. Proponents of digital currency feel the U.S. is lagging behind in adoption, as 9 other countries including China have already launched their own CBDC.
This blip in the crypto markets could prove to be detrimental to Washington’s timeline to wider crypto adoption.
"Washington is Washington and the gears are pretty gummed up right now", said Hoskinson. "It’s likely nothing will actually get done in practice outside of more enforcements and regulation until 2025, with the change of the administration."