31.01.2022 – Since the beginning of November, Bitcoin’s price has easily halved since its all-time high. Unfortunately, there is no fundamental reversal of the trend in sight. On the contrary. Exactly the scenario is emerging that we have repeatedly warned about in this space – politics is tightening the screw.
Cryptos in the sights of tax investigators
Ryan Korner, chief of IRS Criminal Investigation in Los Angeles, recently gave an interesting talk at the USC Gould School of Law, according to Bloomberg. According to the talk, concerns are growing about NFTs – non-fungible tokens, or virtual artifacts – as well as cryptocurrencies. “We’re just seeing mountains and mountains of fraud in this area,” Korner judged. DappRadar added the market for NFT has grown from $100 million in 2020 to $22 billion in 2021. The IRS Criminal Investigation Unit seized $3.5 billion in cryptos last year, according to its annual report. You can imagine what happens to them – the tokens are sold to fill the government coffers.
We mean: What used to be the purchase of alleged Chinese antiquities at Christie’s and Sotheby’s for corrupt Chinese apparatchiks to get money out of the country is now the art trade. Presidential son Hunter Biden, for example, sells highly valued paintings to unknown collectors. Now if you think that this might be patrons bribing daddy, you’re just a nasty conspiracy theorist.
Upcoming Crypto Regulation in the U.S.
Regardless, the White House just announced the regulation of Bitcoin and co. An executive order to this effect is expected to be issued shortly, reported “Barron’s”. State Department, Treasury Department, National Economic Council, the Council of Economic Advisers as well as the White House National Security Council are to cooperate, because for the administration cryptos have “economic implications for national security.”
Conflicting signals from Russia
We wonder if the offensive is also related to the fact that Russia could circumvent any sanctions in the banking sector with e-currencies. Moscow, of all countries, has reportedly eliminated REvil/Sodinokibi, arguably the most brazen, successful extortion crew, the FSB domestic intelligence agency announced. However, we can imagine the talented hackers working for the Kremlin soon. If Russia unleashes a cyber war over Ukraine with the support of China and North Korea, you can expect a mega wave of ransomware attacks against Western industry. Corporations that have been crippled by cyber gangsters will then invest billions of dollars and euros to stock up on BTC and co. and buy their way out.
It is true that a few days ago the Russian central bank called for a ban on trading and mining cryptos in the country. It said these were nothing more than a volatile Ponzi scheme and a risk to financial sovereignty. However, President Vladimir Putin stood in the way of such a crypto ban and praised e-currencies.
Our conclusion from all this is that with the threat of regulation in the U.S., we would have a major reason for the recent bloodbath in digital currencies, along with the Federal Reserve. After all, if the Fed raises interest rates, fewer people will flee into alternative assets. But: dead birds live longer. Cyber crime and cyber war could turn things around. Bernstein Bank wishes successful trades and investments!
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