Bitcoin Gains Abroad Highlight Domestic Tensions

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The tension between financial innovators and governments globally is visible in Australia, where the innovative fintech sector, fresh off the global success of Square’s acquisition of BNPL Afterpays, is at odds with the industry. banking.

Salvadoran President Nayib Bukele Credit: AP

Schot-Guppy reports that fintech companies in Australia are being abandoned as customers by banks at a higher rate than their overseas peers, amid fears of breaking anti-money laundering and anti-terrorism laws.

Peer-to-peer trading platform Bitcoin Babe entrepreneur Michaela Juric said she was turned down by 91 financial institutions because of her business.

But the other driving force behind bank suppression, which many in the fintech community suspect, is the big banks’ desire to maintain their dominance.

Last week, Schot-Guppy testified before the Select Committee on Australia as a Tech and Financial Center that 150 fintech companies had been de-banked by the big banks.

Cases of debanking occur much less frequently in other markets, she said. So I got to see jobs and innovation taking hold there.

Still, the real impact of the crypto rise could overtake the banking industry.

Internet 2.0 Robert Potter sees inherent tensions between the crypto and banking communities.

Dr Philippa Ryan of Australian National Universities has said cryptocurrency will be a wake-up call for the banking industry, she said, but the heart of banking will remain lending against property and tangible assets.

A bigger issue will relate to the black market and the tax system, as well as the ability to move wealth between nations without attracting tax or surveillance. Ryan said cryptocurrency undermines borders and undermines government.

The disruptive nature of Bitcoin and cryptocurrencies is also essential for the kind of innovation that has become a new area of ​​geopolitical competition.

China has launched a digital currency controlled by its central bank that gives it potential for international influence that could challenge the US dollar. Facebook is bravely trying to promote Diem (formerly known as Libra) as an alternative to a future dominated by China.

Bitcoin, which is not controlled by any government, has the prospect of forming an alternative trading system and underground economy, as it does in Lebanon.

While El Salvador forced the so-called B-Day on unprepared citizens (Millennial-bro President Nayib Bukele wants to use volcanic energy to support energy-intensive bitcoin mining), the conflict between innovation and prudence seen at the international level is evident in him.

Governments don’t want to regulate cryptocurrency just yet, says Robert Potter, co-CEO of Internet 2.0, because they don’t want to crush innovation.

But there is a tension between letting it grow and not letting it get out of hand, he said.

For now, the cryptocurrency and fintech community enjoys a lot of freedom compared to banks that have bonds that don’t go away, he said.

It is entirely reasonable that banks should have an interest in maintaining their status, he said, but they are also regulated in these positions.

There is also an inherent cultural difference between cryptocurrency and the banking community.

When you listen to the people who are building these crypto exchanges, they often talk about disrupting financial institutions and the regulatory environment they have created, Potter said.

Light regulation of spectacular innovations: the bankruptcy of Lehman Brothers was seen as the trigger for the 2008 global financial crisis. Credits: Daniel Acker

It is not clear whether supervision will detect the risks created by the innovation.

One of the triggers of the global financial crisis of 2007-2008 was the banking innovation of repackaged and resold mortgage debt in ways no one could fully understand.

The financial collapse, which unregulated innovation helped spark, triggered a deep economic recession, causing public pain in the United States and Europe.

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The nature of cryptocurrency means that its risk is increasingly carried by the public. Crypto and peer-to-peer trading could hide vulnerabilities such as social media misinformation, which do not emerge until the technology is fully adopted.

When exchanges collapse, or are hacked, or when an owner loses their crypto keys, by now the individual often bears the risk.

High level examples abound. Last month, digital coins worth $ 97 million were hacked from the Japanese crypto exchange Liquid, about half of that total was converted into another crypto asset through a decentralized exchange, allowing pirates to run away with the funds.

ANU Dr Ryan, who trades in cryptocurrency, said last week she received an email from a platform she was using telling her that her account would be closed in several weeks. He was asked to exchange his funds before to avoid losing the currency held by the current exchange, a forced transaction.

If it’s not manipulation, I don’t know what it is, she said.

The uneven playing field has been criticized by no less a figure than Jackson Palmer, co-creator of Dogecoin, the currency adopted by Elon Musk.

Have you lost your savings account password? Your fault. Being the victim of a scam? Your fault. Billionaires manipulate the markets? They are geniuses.

He said it is the type of dangerous free cryptocurrency for all capitalists that has unfortunately been designed to facilitate since its inception.

Ryan says that when the blockchain technology behind cryptocurrency is used to release a transaction between banking systems in a regulated manner, it will be a beautiful thing.

What I don’t think is good is when the cryptocurrency is in the hands of pump and dump artists and the black market, she said. At the moment, it’s dominated by them.

The problem globally is that lawlessness still rules the waves.

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