The politicians are taking action. We are seeing them make moves which proves what many were saying all along: decentralize or else.
A lot is being made of the latest cryptocurrency bill that is being negotiated in the United States Congress and for good reason. The government is making its attempt at reigning in the entire cryptocurrency industry.
At the top of the list are stablecoins. They made headlines earlier this year, especially with the implosion of TerraUSD. This sent shockwaves through the cryptocurrency industry as tens of billions were wiped out in a matter of a couple weeks.
This, naturally, got the attention of the politicians in Washington. Of course, they feel it is their responsibility to step up and save the financial system. After all, their track record is sterling in this area.
That aside, it does appear, if things progress as they are written now, that algorithmic stablescoins will be sidelined. The present bill being discussed proposes banning these for two years while federal agencies study them.
It is a move that would affect the Hive Backed Dollar (HBD). This also shows how important it is to keep working on decentralization.
Congress Putting Its Foot Down
Over the past half year, we saw a lot of discussion about stablecoins. They were obviously a target even though most of the politicians running their mouths have little idea what they are talking about. That aside, unfortunately, they have the power to make life very difficult and it appears they will.
This is going to affect exchanges the most. Those that are registered with the government are going to find their ability to engage with the different tokens clipped. It is likely we see the ability to use HBD on exchanges that operate within the United States eliminated with this bill's passage.
To illustrate how many in Washington feel about this topic, here is a sampling:
The stablecoin bill has been in the works for months, and has been delayed in the past, in part over concerns raised by Treasury Secretary Janet Yellen. Yellen has repeatedly cited the TerraUSD collapse when calling for more regulation of the crypto space.
Similarly, Rep. Waters highlighted the risks of stablecoins earlier this year, saying, "investigations have shown that many of these so-called stablecoins are not, in fact, backed fully by reserve assets," and that a lack of investor protections could even "threaten U.S. financial stability."
The threat to U.S. financial stability is a complete joke when uttered by these people. After what the banks have done with little to no recourse just shows how, at best, completely ignorant these people are. Of course, the flip side is that it could exemplify the corruption that surrounds these people.
By the way, the latter would not be that outlandish.
It seems the bill does address stablecoins pertaining to banks.
The stablecoin bill now provides a path for banks and other financial institutions to issue stablecoins, working with their existing network of regulators. But that network would now also include regulators at the state level, providing state-approved stablecoin issuers a 180-day fast track to a federal green light.
Isn't that a slap in the face? They provide a pathway for banks to issue out their own stablecoins?
Now it appears the plan is becoming clear.
How Does This Affect HBD?
The question many might have is how does this affect HBD?
To start, if one is outside the United States, there is no change. Unless other governments adopt this same stance, this is only applicable to those within the U.S.
Also, it is going to target the centralized exchanges. Those are the ones who have to adhere to regulations. This means that any exchanges operating within the U.S. will have to drop any algorithmic stablecoins from their offerings if this bill passes and becomes law.
Fortunately, HBD is not listed on many exchanges so this is not really too much of an issue.
However, it does stress to an even greater degree what we discussed over the past few years. Unless we focus a great deal of attention on getting outside the reach of these governments, the entire industry is in trouble.
When it comes to HBD, we need to focus upon the decentralized path as much as possible.
There are some advantages already in place. For one, there is no centralized company or entity behind the coin. We have no figure to go after as is the case with TerraLuna. It would be difficult to issue an arrest warrant for those behind HBD since there is no individual or group.
Here is where true decentralization separates Hive from the rest.
At the same time, we did see some liquidity pools opening up with HBD derivatives. With pHBD and bHBD, there are a couple options already in place. We simply need to focus upon expanding the options while deepening what is there.
Another advantage is the internal exchange. Here again, Hive's decentralization is a savior. There is no way to limit or restrict what is taking place on there. The exchange operates based upon the node system that is set up. At present, there are over 120 different node operators spread all over the world who produce blocks on a rotational basis.
This means the internal exchange just keeps churning along, allowing people to swap HBD for HIVE.
Build Around The Regulations
We are seeing how this is unfolding. The politicians and bureaucrats in government are not going to stop. This is not isolated to a single, or even a few, countries. It is across the board.
For this reason, it is imperative that we get outside the regulation. Whatever they set down, we develop around. This is the lesson of the Eurodollar system. Here is where the bankers gave us the blueprint to follow.
Since blockchain and cryptocurrency are global in nature, this transcends any single government. This means that everything we do has to spread throughout the world, eliminating a single point of geographic vulnerability.
Another step that must be taken is to open source as much as possible, creating the possibility to duplicate everything. This is where another layer of defense enters. With open source software, it becomes like a game of whack-a-mole.
A final piece is to make decentralized finance (DeFi) truly decentralized. We have a system that is such in name only. Much of what is out there is built upon centralized infrastructure or has a lab/company behind it. Here is where we have to quickly tangent. Hive has a lot of developers who are simply creating software and putting it out there. This is crucial going forward.
For the last few years, this ecosystem flew under the radar. With all that is taking place right now, this is not a bad position to be in. The one benefit we have is that it is unlikely anyone with any power in Washington ever heard of Hive.
We can use that to our advantage.
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