June 19, 2024

Bitcoin Wears a Patagonia Vest Now, but Is It Still Crypto?

Cryptocurrency cleaned up its act this week as spot Bitcoin ETFs made their Wall Street debut in January. The digital tokens are looking almost unrecognizable from what the industry represented just a few years ago, leading to the question, is Bitcoin still crypto?

The “decentralized” part of cryptocurrency is up for interpretation these days. Ever since the Security and Exchange Commission’s approval of spot Bitcoin ETFs on Jan. 1o, cryptocurrency looks much more buttoned up and polished than ever before.

Bitcoin is now, tangentially, sold through America’s largest financial institutions, such as BlackRock and Fidelity. These corporations literally couldn’t play a more central role in finance if they tried. An industry that used to be riddled with crime and small players now looks a lot like the rest of finance. Perhaps that’s good a thing for some, but it also takes away a core value of cryptocurrency.

Crypto Passes The Torch From Cons to Bankers (Cons in Suits)

Sam Bankman-Fried’s FTX is officially not coming back, according to the defunct crypto exchange’s lawyers on Wednesday. There were initial reports that FTX might try to be revived, but it seems the exchange will not take part in this new age of cryptocurrency. FTX will instead focus on liquidating assets and repaying billions to its customers, but they’re not the only ones facing consequences for their crypto crimes.

Police in Germany seized over $2.1 billion worth of Bitcoin from criminals involved in a piracy website, according to CoinDesk on Tuesday. That’s roughly 50,000 Bitcoin, and it’s one of the largest cryptocurrency seizures ever.

What is Germany gonna do with $2 billion worth of Bitcoin? The German government says it’s “unsure,” but perhaps the country will take a page out of America’s playbook: sell it. The U.S. government holds over $5 billion of Bitcoin, and just last week said it plans to sell $117 million of crypto seized from Silk Road. Yes, even the U.S. government is a crypto trader now.

A separate $1.7 billion crypto scheme also came crashing down this week, according to Quartz. “Bitcoin Beautee,” the mastermind behind a global Ponzi scheme, pled guilty to fraud in a Maryland federal court on Monday.

Who Cares?

Cryptocurrency was created to represent a decentralized, deregulated form of currency. Bitcoin’s original platforms and players are largely dead in the water now. Governments, regulators, and banks are becoming increasingly large players in crypto.

It’s frightening in some ways to see Bitcoin co-opted by the same institutions that control traditional currencies. It makes you wonder if crypto is really that different from trading stock. Considering the massive amount of fraud we saw with this first wave of decentralized currencies, it could be considered a good thing that it’s finally getting regulated. However, Bitcoin may now be part of the same systems it was created to disrupt.

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