On the opening day of the Messari Mainnet 2021, the highly anticipated first crypto conference in New York since the launch of COVID-19, a viral tweet stated that the US Securities and Exchange Commission sent a subpoena to a member of the committee at the event. At the top of the elevator in broad daylight. While it remains unclear who was introduced (or why), this is not the first time that the SEC has intervened in the cryptocurrency industry in front of the public. Let’s go back two months.
On July 20, 2021, the Chairman of the Securities and Exchange Commission, Gary Gensler, made his comments, describing the scope of the SEC’s powers in the crypto space:
It doesn’t matter if it’s a stock token, a security-backed hard token, or any other virtual product that provides synthetic access to the underlying security. You must operate under our stock system. ”
Like the SEC’s bold look on Minnette, Gensler’s remarks weren’t unexpected. It arose because Gensler — along with his regulatory environment — finally came to the shocking realization that tokenized synthetic crypto stocks are like stocks, but better.
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So what are synthetic drugs?
Synthetic assets are artificial copies of existing assets whose prices are related to the real-time value of the assets they represent. For example, a synthetic stake in renewable energy giant Tesla can be bought and sold for the same price as the real stake in Tesla at any time.
Consider the average stock trader looking for profit margins, availability, and privacy. For them, the apparent “reality” of TSLA purchased from a broker-dealer does not hold up compared to the many synthetic copies of cryptocurrencies that can be bought at a fraction of the price at 8:00 pm on Sunday. Also, it is only a matter of time before traders can bet the synthetic TSLA in the decentralized financial protocol to earn interest or obtain a secured loan.
Related: Crypto Asset Explained
The role of synthetic materials
Decentralized blockchain platforms and legacy financial systems are about to clash in one of the most turbulent battles in economic history, and Gensler’s comments are only a snapshot in hand. Make no mistake: Decentralized Finance (DeFi) and Traditional Finance (TradFi) have already defined their battle lines. They want to remind both established, established and new players that, contrary to what modern wisdom suggests, exchange systems provide value, not the other way around. The implications of this cannot be underestimated: synthetic assets create a level playing field in which centralized and decentralized systems can compete for users and capital – a free market of markets.
Typically, digital markets are powered by many assets that compete with each other. But when the asset side is static, i.e. when there are identical assets on multiple platforms, it is the markets that compete for the largest share of each asset’s daily trading volume. In the end, traders define the account and decide where the assets should live and which systems should die.
Thus, while Bitcoin (BTC) indirectly competes with fiat currencies as a unique form of money moved through a decentralized network, a pool of new, stacked coins tied to fiat currencies poses the most devastating and immediate threat to national governments and their central leaders. vessel. …Unlike Bitcoin, which is often very volatile and weird to outsiders, fiat-backed coins cut out complex swaps and keep things simple: 24/7 access, low-cost international transfers, pipet interest rates, And 1: 1 fiat redemption.
On the topic: Stablecoins pose new dilemmas for regulators as mass adoption approaches.
Even for skeptics, stablecoins are a bargain, and the US Congress has made its mark of recognition with its December 2020 stable-state bill, which would require stablecoin issuers to share the same banking laws as their central counterparts in Chase, Wells Fargo, and so on.
Existing organizations have a long history of seeking out, recruiting, and even sabotaging their competitors. It’s not hard to see where the old banks’ aversion to synthetic drugs came from. As decentralized platforms become more user-friendly and popularized, significant demand from buyers from legacy platforms and their previously exclusive assets will move to the original fixtures in digital form.