Crypto and Blockchain: Diverging Paths
As regulatory bodies effectively squeeze crypto companies out of certain markets, blockchain technology is being adopted with success and broad reach, at government level as well as by the private sector.
As per industry experts, blockchain is gradually separating from its crypto association in the public's perception. While blockchain morphs into a kind of stand-alone powerhouse, the future for crypto appears rather bleak, observes Mrinal Manohar, the CEO and co-founder of Casper Labs.
The Ebbing Token
You don't have to look far for examples. The lengthy legal tussle between the American regulator SEC and Ripple Labs has become something of a cautionary tale. The company is open about its readiness to abandon its American jurisdiction. In May, Ripple purchased Metaco, a Swiss company known for securely storing digital assets, for $250 million and is now considering the possibility of relocating its operations closer to the Alps.
US authorities have come to realize that the crypto business is gradually departing the US. However, they don't have a clear, united answer as to why this is happening. Stephen Lynch, a congressman from Massachusetts, believes that crypto companies, especially those issuing stablecoins, are trying to move towards areas with the least regulation.
A race to the bottom is the custom of this industry,
Lynch stated.
Other lawmakers, like Warren Davidson of Ohio, concur that crypto companies are indeed heading offshore, chasing clearer regulations. Businesses have waited far too long for a rulebook from American regulators and have given up hope of receiving one.
Moreover, the US isn't the only one reluctant to accommodate crypto. Another high-profile controversy is tied to Binance's mid-May announcement of its decision to exit Canada. “Unfortunately, (the) new guidance related to stablecoins and investor limits provided to crypto exchanges makes the Canada market no longer tenable for Binance at this time,” the crypto exchange stated in a tweet. The situation in Canada is particularly intriguing given that CZ, the founder and CEO of Binance, is a naturalized Canadian citizen. To paraphrase a well-known saying — regulators are cannibalizing their own progeny.
Blockchain: The Flourishing Technology
If you thought ‘let’s get rid of the technology because I don’t like porn and gambling,’ we wouldn’t have e-commerce,
Mrinal Manohar, CEO and co-founder of Casper Labs, quips.
Evidently, based on this mindset, governments are shunning cryptocurrencies while embracing blockchain technology.
For instance, in Colombia, land ownership details are now stored on the blockchain. It's worth noting that unresolved land ownership issues had previously fueled a bloody civil conflict in this country that persisted for decades.
Consider the case of SABIC, a chemical company with an impressive capitalization of $73 billion. In the spring of 2023, SABIC started paperless trading through the Global Shipping Business Network, which operates on the blockchain. Other participants of the GSBN include titans such as COSCO Shipping, Hong Kong's Hutchison Ports, and France's PSA.
Then, there's the state of California, which is embarking on a project to tokenize the records of the California Department of Motor Vehicles (DMV). Solutions based on blockchain technology are aligning the interests of consumers, businesses, and US federal agencies. The goal is to boost efficiency, and in turn, cut down costs across all processes. In particular, the DMV is gearing up to drastically revamp its entire system by tokenizing the rights to the 14 million vehicles registered in California. These ownership rights will be stored as Non-Fungible Tokens (NFTs) on a private version of the Tezos blockchain. This form of tokenization will facilitate fractional ownership of vehicles, allowing car enthusiasts to use the non-fungible token as collateral within decentralized finance (DeFi) platforms or even in offline transactions.
At one point, blockchain served as a robust foundation for issuing a multitude of cryptocurrencies and for establishing their ecosystems. It underwent rapid expansion, but what propelled this growth? The answer is evident. The new technology was substantially financed by the very cryptocurrency it birthed. This circular dynamic persisted for a considerable time. But now, with regulators and governments bringing down the hammer on cryptocurrencies, might the blockchain end up starved of resources for its continued development?
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