In several discussions last week it became clear that there is a disconnect between blockchain perceptions and reality. Those discussions were had with crypto hedge fund folks who stand squarely on the front lines of the crypto world and see it as clear-eyed as they are paid to see it.
One of their biggest concerns is that the US is losing ground very, very quickly to China across the board in crypto innovation, regulatory and governmental involvement, and capital investments. Several voices believed that it wasn’t just a ‘what if’ as to Chinas aggressive moves in the space but rather a ‘how quickly’ conversation.
Specifically, there were several developments that were highlighted. Massive Bitcoin mining farms that are fed by newly built dams and energy sources that are renewable and never-ending. Large percentages of Bitcoin and crypto whales that now hail from China. Sizable trading blocks and exchange traffic coming from China. And maybe most interesting is the huge amounts of capital (billions) that the Chinese government is handing out to innovators in crypto, in China, to carry out that innovation.
Those sorts of developments do not exist in the United States, or anywhere else. In the US the crypto scene gets out of their mind excited when the SEC refuses to call Bitcoin a security; while simultaneously stating that ‘all ICO’s look like securities’ to them. Those are not the conversations that are happening in China. Instead, the government is shovelling money into the space to attempt to dominate its foundation.
Even with all of that evidence, Chinas government continues to give lip service to banning ICO’s and cryptocurrencies in general. But the folks we spoke to in crypto were having none of it.
We spoke to a hedge fund source and he was unanimous in his concern over China’s speed and commitment in crypto.
“Anything their government says about crypto is false and untrue. They are giving lip service to a ban on cryptos so that the average citizen doesn’t discover its power. They are sharing their work in crypto with the elites there and the vendors that serve them. In the space of about a year, they’ve passed the US. It doesn’t mean they ultimately win, but it does mean that the rest of the developed world has some catching up to do.”
No doubt that the nature of crypto maturity having as short a fuse as any tech we’ve ever seen, it isn’t a surprise that a larger player could come in, strike it rich and dominate.
All of this is another reason that these hedge fund voices believe that meaningful regulation of ICO’s and crypto designations are coming from the SEC and other regulatory bodies by the end of 2018.
“We sincerely believe that there is going to be guidance, if not outright regulation from the SEC by the end of this year. We would be very, very surprised if that wasn’t the case.”
As of today, the U.S. is playing catch up. China is leading. And the rest of the world is waiting to see who to follow.