In the post-FTX world, being a cryptocurrency CEO is really hard.
Not only do your bags empty and your revenue diminish, but you also have American financial regulators breathing down your neck one day with subpoenas and lawsuits the next.
It is understandable, then, why industry leaders like Brian Armstrong might want to present themselves to both the media and the authorities as they move forward in the cult of the state.
As the CEO of Coinbase, America’s largest cryptocurrency exchange, one misstep could lead to his company being sued and regulated beyond repair by politicians already paranoid about an industry dominated by fraud. After all, what was his reason for leaving the country to not ban cryptocurrency outright?
In a media blitz earlier this week, the CEO attempted to answer that question: supporting “cryptocurrency” while continuing to stand up for the best interests of the US government. However, the result has led him to promote the use of cryptography that contrasts sharply with the “decentralized” ethos in which Bitcoin was born.
That’s right: Brian Armstrong endorses a stablecoin issued by the United States government.
The Armstrong case for cryptocurrency in America
in editorial Posted with CNBC on Wednesday, Armstrong made his usual argument for why the United States should be more welcoming to cryptocurrency, so as not to drive the industry outward. Doing so will have countless negative consequences that can be summed up in three points:
- The United States will lag behind its international competitors in technological and financial innovation, and miss out on many consumer benefits.
- The cryptocurrency industry will thrive in an unstable and unregulated external environment, or in jurisdictions with clearer rules.
- The importance of the dollar on the world stage will continue to weaken and will run the risk of being overtaken.
The last problem is what Armstrong’s stablecoin idea intends to address. As he writes:
“Imagine a world where the United States issues its own stablecoin, the US dollar, on a blockchain. Not only will this provide access to dollars for millions of previously unbanked and underbanked people, but it will also be the de facto digital currency for international currency remittances and transfers, enabling It ensures that the dollar remains the global reserve currency on and off the chain . . . “
Stablecoins vs CBDCs
The idea of using stablecoins and other cryptocurrencies for international transfers is nothing new. MoneyGram linked With the Stellar blockchain last year for exactly this purpose, some central bankers have done so as well a favour their potential in the remittance market.
But backing a government-issued stablecoin, as opposed to a privately issued token like Tether’s USDT or Circle’s USDC, is another story. Such a token would be nearly indistinguishable from a central bank digital currency (CBDC), which even pro-crypto members of Congress have. understand It will likely be weaponized as a tool of state surveillance.
The Federal Reserve is already in talks about what a potential CBO currency might look like. In September, Chairman Jerome Powell said CBA’s digital currency would be “private,” but not “anonymous,” meaning it would remain a permission-based system that verifies the identities of its users.
Whether the Fed is entrusted with not invading American privacy in this way – and not switching to a 100% state-controlled cash ledger like China’s digital yuan – is another story. Ultimately, CBDCs require users trust A centralized broker to not censor, freeze, restrict or reduce the value of your funds.
Aren’t these the problems that Bitcoin, the first decentralized public blockchain, was supposed to solve?
The real point of bitcoin is its decentralization
Let’s go back to other points from Armstrong about the many benefits of cryptocurrency, as he lists them in his article:
“Crypto is a faster, more private, efficient, cheaper and user-controlled financial system. It is not a replacement for the traditional financial system, it is an upgrade.”
While this statement isn’t necessarily all wrong, it really misses the point. Bitcoin was not originally created to be a more efficient payment binary.
Basically, Bitcoin is an open, neutral, borderless, and censorship-resistant cash network. It is often referred to as the “rulerless rules” system he uses Proof of work It remains reliable and secure (the consensus mechanism is often criticized for being loud inactive.)
He is considered by some to be Bitcoin’s biggest proponents Domineering control, allowing users who live in both oppressive regimes and hyperinflation to maintain control over their money and purchasing power. In short: Bitcoin embodies freedom.
As a reliable, functional monetary system, Bitcoin effectively solves the problems that justify the existence of central banks and fiat currency to begin with. to the quote Satoshi Nakamoto:
The main problem with traditional currency is all the trust needed to make it work. A central bank must be trusted not to devalue a currency, but the history of fiat currencies is littered with violations of that trust. Banks must be trusted to hold our money and transfer it electronically, but they lend it in waves of credit bubbles that barely provide a fraction.”
How does this fit with Armstrong’s argument that cryptocurrencies are not a “substitute” for the financial system?
Compared to the level of state control over the banking establishment today, Bitcoin offers a more liberal alternative. It puts digital property rights in the hands of its owners, reclaiming it from a banking institution that has controlled it for decades as a mere by-product of technological limitations.
In this sense, bitcoin is the opposite of the government-issued stablecoin that Armstrong idealized. He. She Remove Control by the monetary authorities of our time – such as the United States – not Strengthen they.
Given that “decentralization” has been the buzzword of choice in cryptocurrencies over the past decade, that is And Good thing right?
The inevitable betrayal of Crypto leaders
Decentralization may sound great from a human perspective, but for Coinbase? This is just bad for business.
Sure, that sounds good to the army of cryptocurrency-loving libertarians who value such things. But for a US-regulated, publicly traded company, it’s hard to go into too much detail about what “decentralization” entails without tempting the government to follow you.
As it stands, Coinbase is already up and running Strong legal pressure by the Securities and Exchange Commission which only hurts its earnings. Explaining how cryptocurrencies give consumers direct access to a technology that threatens the government’s geopolitical control will only worsen Coinbase’s relationship with regulators, as well as the industry as a whole.
Thus explains Armstrong’s bizarre tendency to promote highly paradoxical crypto technology like a government-issued stablecoin, in favor of true cypherpunk values. His main motivation is to keep his company and industry alive, even if that means turning cryptocurrency into something unrecognizable.
Know that this is nothing new. Circle, a stablecoin firm closely associated with Coinbase, did not hesitate to breach the ethics of the “censorship-resistant” cryptocurrency in August, when it frozen USDC has been locked inside Tornado Cash addresses that OFAC has flagged. Even as he voiced opposition to Treasury policy, his firm’s hands were tied in enforcing the new rules under the requirements of the Bank Secrecy Act.
Former CEO of FTX Sam Bankman-Fried (SBF) (who red flags Much easier to spot in hindsight after recent events) He was much less rude than that. Just weeks before his exchange collapsed, he was active supported To regulate DeFi using blacklists similar to OFAC and requiring DeFi front-end providers to register as broker-dealers. Naturally, it has been widely criticized by the cryptocurrency community for effectively defeating the purpose of DeFi with such rules.
Also, CBDCs are not a new idea for cryptocurrency leaders. Joseph Lubin – Co-Founder of Ethereum and CEO of ConsenSys – Previously Supported CBDC Issuance on the Ethereum Blockchain, Within 28 CBDC Pages White papers published by the company.
“CBDCs provide central banks with future-oriented tools to enable them to implement monetary policy in more direct and innovative ways and keep pace with technological change,” he wrote.
Executives like Armstrong, Allaire, SBF, and Lubin may or may not hold the core values of cryptocurrency. Regardless, all of them are just crypto bros second, And a businessman Firstly. Seeing them forced to side with the government on values was only a matter of time.
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