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Almost from the day, Bitcoin was launched by a shadowy (likely nonexistent) figure back in 2008 cryptocurrencies have been attracting attention for their unregulated nature and their potential to wrest money from the hands of a few powerful bankers and return it to the people. The financial crisis of 2008 (that neatly coincided with the launch of Bitcoin) was proof positive to many that the centralized financial system was broken and that the people were running it was merely no longer qualified to have their hands on other people's money.

What Goes Up...

As awareness of Bitcoin and blockchain technology in general slowly spread it began to attract more and more believers until that groundswell of awareness formed a speculative tidal wave in 2017 that saw cryptocurrency valuations go through the roof. By mid-December, one Bitcoin was worth nearly $20,000. To no one's real surprise once enough money was at stake the federal government decided it was time to stick their foot in the door and either get a piece of the action or bring the action to a halt which is precisely what they wound up doing. Just as Bitcoin seemed sure to pass through the $20,000 ceiling word was leaked that Uncle Sam intended to take a look at the goings-on in the  crypto verse. Within weeks the currency was down 50% and by mid-2018 down some 70%.

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Hitting the Brakes

Now that officialdom has crypto on the ropes it’s looking more and more like they are determined to finish it off. The Financial Industry Regulatory Authority (FINRA) just issued new guidelines for dealers and brokers that state they must notify FINRA if they participate in or facilitate any digital coin activity. FINRA is vague about what they plan to do with this information, but those attempting to read their obtuse signals don't buy the notion that they’re only concerned with protecting retail investors. In fact, more than a few industry pros sense the heavy hand of the SEC behind the move and believe it to be nothing less than a precursor to full scale, future regulation of the industry.

And That’s a Problem Because…

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A lot of people on the outside of the crypto movement don't understand what all the fuss is about. After all banks and stock markets are regulated, and plenty of people still get rich, so why all the fuss about a few regulations on crypto? The answer is simple; cryptocurrencies have currency (so to speak) because they are unregulated. Remove that cornerstone principle, and the whole house of cards collapses.

One of the main, if not the main, attractions of crypto was its potential to establish an alternative financial system where people could go about their business without the banks or the government or anyone else telling them what they could or couldn't do or dipping their hand into the revenue stream. Once regulated. However, crypto becomes just another type of banking, and we're back where we started a decade ago; with a few influential people calling all the shots.

The Loss of Safe Havens

The threat to cryptocurrencies extends beyond the coastline of the US, and this is one more reason the bears are ruling the crypto roost in 2018. While crypto proponents work feverishly to try and drum up renewed enthusiasm smart investors are waking up to the fact that even former safe havens like China are no longer taking a hands-off approach. Late in 2017, the Chinese imposed a total ban on ICOs (initial coin offerings) and shortly after that imposed an equally comprehensive prohibition on trading in all virtual currencies. And as if that wasn't enough the government in Beijing then began tracking down and shutting off the power to the massive server farms that powered Bitcoin miners. The upshot is that it's becoming increasingly clear that there will soon be nowhere left to hide for crypto believers and that the current downturn is more than just a cyclical bump in the road; it's an existential crisis.

The Future is Now

While the threat of regulation in the US and the moves by the Chinese government to kick crypto to the virtual curb have been getting all the press other governments and financial institutions around the world, fearful that cryptocurrencies might pose a danger to the established order, have also moved to rein in the phenomenon.

  • ​In Israel, the government officially declared that Bitcoin was not a currency but instead a hard to define the financial product that posed a risk to both consumers and banks due to its unregulated nature and potential compliance issues.
  • ​In a move few saw coming credit card behemoth VISA abruptly ended its relationship with Wavecrest. VISA had used WaveCrest to convert cryptocurrencies to cash for current debit card transactions. VISA did not explain the abrupt decision other than claiming​ WaveCrest had somehow (not defined) violated VISA operating regulations.
the future is now
  • ​The government of Canada only weeks ago announced that henceforth any business that deals with virtual currencies will be regulated as a "Money Services Business." The new regulations require any such businesses to report any "suspicious behavior" to the relevant authorities immediately. The official pronouncement cited the threat of terrorists leveraging the anonymity of cryptocurrencies as one of several justifications for the move.
  • ​The EU is also busy formulating regulations it plans to implement that will force crypto platforms to carry out due diligence on every customer and to report those who seem like they are trying to skirt the rules or who otherwise engage in suspicious behavior. Treasury in the UK has stated that they aim to bring these exchanges as well as online virtual wallet providers into compliance with anti-money laundering and anti-terrorist financing regulations.​

So while the just-announced FINRA regulations might seem like the leading edge of a future regulatory clampdown, the fact is the leading edge passed through some time ago. The future is, in fact, already here with the global powers that be working overtime as you read this to bring the crypto verse to heel.