Earlier this year, the crypto community went into an uproar over news that Canadian banks had frozen financial accounts tied to protesting truck drivers who had been blockading a key border crossing.
The truckers were angry about vaccine mandates and other COVID-19 measures, but as the narrative went, you did not have to agree with them to recognize that Canadian Prime Minister Justin Trudeau had used the financial system to punish political adversaries, an episode that reinforced the need for cryptocurrencies that were fully resistant to any interference.
That was all well and good, until it was not.
Just months later, the interference-resistant, permissionless money industry is itself getting into the business of locking up people’s assets. On June 23, Voyager Digital Ltd became the latest crypto firm to limit customer withdrawals from its platform, adding to similar recent moves from Celsius Network, Babel Finance, CoinFlex and others.
The moves show an industry that does not stand up for many of its core ideals when push comes to shove.
To hear the zealots talk about it, crypto was supposed to be an antidote to state hegemony, meddling central banks and a financial system that failed Americans in the run-up to the Great Recession, and some of that was arguably true of foundational innovations such as bitcoin, provided owners stored their coins outside of centralized exchanges.
A key wrinkle in the Canadian trucker protests was that the government actually went after crypto, which stunned some people who thought they were beyond the reach of the state.
However, that is rarely true when you entrust the keys to your crypto to an outside custodian.
Of course, not everyone is comfortable keeping their coins in “cold storage” hardware wallets, and an industry has sprung up to bring crypto access to the masses that has turned out to be far from the permissionless ideal.
To be sure, the industry’s latest troubles are not entirely of its own making. Everything started when global central banks, including the US Federal Reserve, pledged to aggressively raise interest rates after a late start in tackling the worst inflation in 40 years.
That has simultaneously torpedoed every financial market in the world, and crypto happens to be particularly vulnerable. The main coins trade like high-beta tech stocks, which means they fall when the NASDAQ 100 does — only more.
The industry might have slipped through this mess with just a few scrapes if the ecosystem that sprung up to profit off the coins had not entangled itself in such in an interdependent labyrinth of risky leverage, but that is just what transpired. Many of these not-so-permissionless platforms promised eye-popping “yields” on crypto deposits by lending out funds to high-risk speculators whose positions have blown up in the market downturn.
Certainly, the limits on withdrawals today are of a different nature from what happened in Canada. Ultimately, these platforms look as if they are taking steps to prevent the crypto equivalent of bank runs, not expressing a political view. The people behind many of these crypto lending operations are scared, and their true colors are starting to show.
However, you do not get to grandstand about financial “freedom” when it is convenient and then get a free pass when you become everything you have been criticizing.
As it turns out, the values of permissionless money mattered until they did not.
Jonathan Levin has worked as a Bloomberg journalist in Latin America and the US, covering finance, markets and mergers and acquisitions. Most recently, he has served as the company’s Miami bureau chief. This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
With escalating US-China competition and mutual distrust, the trend of supply chain “friend shoring” in the wake of the COVID-19 pandemic and the fragmentation of the world into rival geopolitical blocs, many analysts and policymakers worry the world is retreating into a new cold war — a world of trade bifurcation, protectionism and deglobalization. The world is in a new cold war, said Robin Niblett, former director of the London-based think tank Chatham House. Niblett said he sees the US and China slowly reaching a modus vivendi, but it might take time. The two great powers appear to be “reversing carefully
Taiwan is facing multiple economic challenges due to internal and external pressures. Internal challenges include energy transition, upgrading industries, a declining birthrate and an aging population. External challenges are technology competition between the US and China, international supply chain restructuring and global economic uncertainty. All of these issues complicate Taiwan’s economic situation. Taiwan’s reliance on fossil fuel imports not only threatens the stability of energy supply, but also goes against the global trend of carbon reduction. The government should continue to promote renewable energy sources such as wind and solar power, as well as energy storage technology, to diversify energy supply. It
Former Japanese minister of defense Shigeru Ishiba has been elected as president of the governing Liberal Democratic Party (LDP) and would be approved as prime minister in parliament today. Ishiba is a familiar face for Taiwanese, as he has visited the nation several times. His popularity among Democratic Progressive Party (DPP), Chinese Nationalist Party (KMT) and Taiwan People’s Party (TPP) lawmakers has grown as a result of his multiple meetings and encounters with legislators and prominent figures in the government. The DPP and the LDP have close ties and have long maintained warm relations. Ishiba in August 2020 praised Taiwan’s
On Thursday last week, the International Crisis Group (ICG) issued a well-researched report titled “The Widening Schism across the Taiwan Strait,” which focused on rising tensions between Taiwan and China, making a number of recommendations on how to avoid conflict. While it is of course laudable that a respected international organization such as the ICG is willing to think through possible avenues toward a peaceful resolution, the report contains a couple of fundamental flaws in the way it approaches the issue. First, it attempts to present a “balanced approach” by pushing back equally against Taiwan’s perceived transgressions as against Beijing’s military threats
RSS