Dusty roads, good guys but also many bad guys, Indians confined to reservations, alcohol, and violence, while riding horses in red and endless sunsets. For a long time, the historical landscape (and, above all, our imagination) has been populated by such elements when thinking of the Far West.
But how many of these elements also characterize the crypto world? Well, this world is made up of wonderful views, new technological “railways” ready to connect the different “cities” that populate our reality, just as the first American railway connected New York to San Francisco in the old West; but as in any respectable Far West, there are also saloon scammers, unscrupulous bandits, and new sheriffs ready to catch them after long and bloody shootouts.
In the crypto world, last year saw criminal episodes such as the rug pull of the Squid Game (SQUID) token, which recorded a 45,000% rally before collapsing, but, in this case, the only ones “playing Indians” were the project founders, disappeared, probably, in some crypto “reservations.” We also have some crypto exchanges, very similar to certain saloons of the past, where reckless players seek economic returns from rather exotic blockchain projects; we have, then, digital gold miners (read: bitcoin) who sometimes, instead, acquire, at most, brass, if not directly ripped off by promoters of non-fungible tokens (yes, because many NFTs are just junk or examples of wash trading, while fine art requires decades of selection by critics and exposure in major world galleries to establish itself on the markets, as well as having to offer diversification and decorrelation from other assets…).
The Crypto Far West market is vast, and there is room for any fair: we remember the recent million-dollar sponsorships of crypto world operators to the Italian football world, increasingly in need of funds. And, then, in these cases, the crypto adage does not stink is quite appropriate; especially since many of the sponsors have already been sanctioned in other jurisdictions for violating anti-money laundering regulations and/or have blatantly violated the discipline of offering investment services and activities, or, in any case, have social compositions of dubious Byzantine complexity and/or legal seats in opaque jurisdictions. Just recently, on the basis of the above, the Arsenal Football Club had to stop the commercialization of a fan token for lack of transparency in the information addressed to consumers, and Manchester City suspended its partnership with the DeFi crypto company, 3Key, for the latter not having passed the minimum due diligence requirements, required by the famous football team. Even with reference to Italian football teams and some of their famous crypto sponsors, more attention from our national supervisory and judicial authorities would be necessary: the writer suspects a lot of lack of clarity in the balance sheets of such companies, in their commercial communications, and, unfortunately, also in compliance AML/CFT arbitrages. Similar interventions to obscure the websites of certain companies in the crypto sector, as recently implemented by CONSOB, would perhaps be desirable for some of these companies, or do our national sheriffs not care about the sometimes very unvirtuous connection between the world of Italian football and the crypto world?
If we complain about a lack of sensitivity among our sheriffs on the issue, we cannot say the same for those across the ocean. Perhaps a little quietly – as often happens – and in a somewhat cryptic form for readers unfamiliar with the language of politics, but a crucial message has nonetheless leaked out to crypto market operators from one of the most well-known, feared, and expert regulators in the Crypto Far West, the Chair of the U.S. Securities and Exchange Commission (SEC), Gary Gensler. In a recent statement, “Remarks before the Investor Advisory Committee”, recalling how the crypto market has reached significant volumes, he pointed out how the American regulator is no longer willing to turn a blind eye to elusive/abusive conduct:
“For those who want to encourage innovations in crypto, I’d like to note that financial innovations throughout history don’t long thrive outside of our public policy frameworks. If this field is going to continue, or reach any of its potential to be a catalyst for change, we’d better bring it into public policy frameworks.”
To this writer, the diplomatic language above, if spoken by a sheriff of the Far West, might sound something like: “Dear Cryptobandits and Co., we’re about to come get you inside the saloon, surrender yourselves first (and negotiate, possibly) or there will be injuries! By Sheriff Gary Gensler”.
Therefore, what emerges from the statement of the American SEC is that, as the crypto phenomenon grows in both its volumes and social relevance, the most authoritative watchdog organizations are no longer willing to tolerate conduct on the brink of legality (or in its most blatant disregard) by some crypto market operators. All ecosystem operators who have acted so far by raiding stagecoaches, causing injuries, and taking refuge in the wild valleys of the crypto world, are invited to reconsider their business models and commercial offerings, in order to be innovators and at the same time credible interlocutors with the authorities, for the purpose of a harmonious development of the crypto ecosystem.
On the other hand, for the sake of fairness, it is worth remembering – if necessary – how the crypto ecosystem boasts operators of undeniable value and reliability who, even in Italy, seek constant dialogue with the authorities for the development of the sector in full compliance with the regulations; likewise, we have representatives of traditional finance who have shown little transparency in their communications with the public on cryptocurrencies. It was well known in the crypto community that in recent years, UniCredit Italy had terminated its contractual relationship with some of its account holders for repeatedly sending funds in fiat currency to some exchanges for the purchase of cryptocurrencies, thereby limiting the operational capabilities of its customers. What was known – mostly to insiders or poor account holders who had been limited in their operations – has now become public knowledge with an official tweet from UniCredit Italy in response to some criticisms directed at it in a Twitter discussion. In a tweet on January 7th, UniCredit Italy explained its conduct by responding to some furious customers that “[…] the Group’s current policies prohibit relationships with counterparties issuing virtual currencies or acting as exchange platforms.” It is curious to note that with a subsequent clarification tweet to the January 7th tweet, the Italian bank denies what was previously stated:
The second tweet seems to contradict what is indicated in UniCredit Italy’s policies: have they therefore changed following the recent media storm? It would be appropriate to know this more clearly, or other customers may decide to leave UniCredit Italy. It must be said that the story seems like a ‘spaghetti crypto western’!
If, on one hand, 2022 will be a year marked by the regulation of the crypto world; on the other hand, it would be appropriate to see some prestigious banking institutions reconsider outdated corporate policies and engage more with the most serious players in the crypto world.
And, in the end, as in all stories, someone will say, one day, that there was once the ‘Wild’ in the Crypto Far West…
TO BE CONTINUED
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