Political Reading of the Bitcoin - US Drive to Dominate Cryptocurrency
بسم الله الرحمن الرحيم
Political Reading of the Bitcoin - US Drive to Dominate Cryptocurrency
On Monday 8 February Electric vehicle manufacturer Tesla Inc. announced, in its annual disclosure, that it had invested about $1.5 billion in the cryptocurrency Bitcoin in the last month. This disclosure came following the accelerated rise in the price of the cryptocurrency which started last November, leading to quadrupling its value and peaking to around $50,000 on 16 February 2021.
This spike was remarkable and unprecedented, especially after the previous falls the currency suffered in 2018 and 2019; and although some observers have attributed the recent gradual rise in the price of Bitcoin that started in the second quarter of 2020 to the collapse in oil prices and the stock markets’ turbulences caused by the knock-on-effect of coronavirus on the world economy, there are, however, a host of strong indications that a powerful volition has been behind what is occurring. In March 2020 Forbes Magazine reported in a promotional manner that Bitcoin would achieve astronomical profits if the US launched cryptocurrency based on the Democratic Party’s proposed bill pertinent to providing financial support to alleviate the economic impact of coronavirus, and which called for establishing a digital dollar wallet for every US citizen. The magazine confirmed that major financial institutions had started investing in in Bitcoin. The European Union (EU) for its part announced on 18 September 2020 that it would launch a cryptocurrency in 2024. This triggered the demand for cryptocurrencies after it had been stagnating and encouraged several investors to invest in Bitcoin, which consequently reduced the pressure on the spiralling demand for gold whose prices peaked to near $2000 per ounce as a result of the shepherded media campaign to deepen the state of uncertainty vis-à-vis the world economy and the fears over the coronavirus crisis and its fallouts.
In order to perceive the dimensions and the fallouts of this momentous and constant rise that started in November 2020 and of the investors’ attraction to cryptocurrencies, especially Tesla’s investment, due to its standing in the US economic and political scene, it would be imperative to take into account the motives of Tesla Inc., its funders, and the approaches of the various wings within the deep state, especially the financial and the industrial ones, including the new industries such as the digital and environmental. Tesla Inc. manufactures electric vehicles and giant batteries for energy storage; it never had any presence in the deep state like the institutions of the defence industry, namely Boeing and Lockheed Martin. Tesla Inc. was founded in 2003 and in less than 20 years, its annual revenues reached $21 billion. Besides, it is not the first company to express an interest in cryptocurrencies. Facebook has expressed its intention to spearhead a cryptocurrency under the name Libra since 2019. The decision of new economy firms with influence on the US administration’s trends such as Tesla, Facebook and Microsoft among others to jump on the bandwagon of cryptocurrency denotes undoubtedly the presence of a pressure being exerted by them and by some financiers on the decision-making circles in the US, especially on the Federal institutions such as the Treasury, the Federal Bank, and The Bureau of the Fiscal Service, to organise cryptocurrencies within a legal framework and regulatory laws to protect capital with governmental protection, especially that the second major investor in Tesla Inc. after the founder Elon Musk is the Susquehanna International Group, which is considered one of the biggest stimulator of trade in cryptocurrencies such as Bitcoin and Ethereum with 500 investors dealing with it in cryptocurrency since 2016.
The group expects these currencies to replace gold as a rare commodity and a safe haven, or so it is trying to promote in order to attract investment in the cryptocurrency market, expand this investment and incentivise the state to regulate it.
On the other side of the fence, the Republicans, Trump’s supporters in particular, would probably resist the notion of the private sector, especially the digital industries sector, being independent in coining cryptocurrencies, and would attempt to weaken their influence in terms of orchestrating the polices and occupying the positions of decision-making. This is why Donald Trump was averse to cryptocurrencies and slammed Facebook for its endeavour to spearhead its cryptocurrency Libra. It has, however, been noted that the dynamism pertinent to Bitcoin and other cryptocurrencies has been gathering a remarkable momentum since the arrival of Biden and the Democrats who have been backing digital industries from the onset.
This explains the statement of US Secretary of the Treasury Janet Yellen in which she said: “I think we need to look closely at how to encourage their use for legitimate activities while curtailing their use for malign and illegal activities. If confirmed, I intend to work closely with the Federal Reserve Board and the other federal banking and securities regulators on how to implement an effective regulatory framework for these and other fintech innovations.” All this is part and parcel of the drive to regulate cryptocurrencies and give them an official status.
It would also be imperative to discern the difference between the Blockchain technology and the cryptocurrencies that rely on the technology. The former is is a shared, immutable ledger that facilitates the process of recording transactions and tracking assets without the need of a third party such as a Central Bank or Customs and Excise, whereas the latter, i.e. cryptocurrencies such as Bitcoin or Ethereum, they can be used to pay for a commodity or a service or in any transaction without being linked to any specific currency; and the choice is left both parties of the contract.
This is what has occasioned the drive to regulate cryptocurrencies; because if they remained a loose cannon, they could cause a fiasco. Hence, governments set about attempting to constrain the technology and the currencies and harness them politically and economically. This is why Janet Yellen said that cryptocurrencies “can be used to finance terrorism, facilitate money laundering, and support malign activities that threaten U.S. national security interests and the integrity of the U.S. and international financial systems.” She elaborated: “I think many are used … mainly for illicit financing and I think we really need to examine ways in which we can curtail their use and make sure that anti-money laundering (sic) doesn’t occur through those channels.”
“I think we need to look closely at how to encourage their use for legitimate activities while curtailing their use for malign and illegal activities,” she added. This statement was by and large echoed by the president of the European Central Bank Christine Lagarde with the aim of justifying the regulating and controlling of cryptocurrencies.
Inducing the peoples and the countries of the world to accept the notion of cryptocurrencies has become a political reality since most of the world’s assets saved in dollars or euros are virtually digital currencies today since they are not covered by gold. The grounds for digital currencies and cryptocurrencies have been prepared since the events of 9/11 with the aim of linking financial transactions to the systems and laws enacted by America under the theme of a “unified financial regulator”, which is in fact epitomised in an international organisation that exerts international political pressure and compels the countries of the world to generate financial, legal and procedural policies and systems, and carry out a host of amendments to suit the interests of the seven major powers; this includes digitising financial transactions to facilitate the process of controlling, monitoring and acquisitioning funds by US judicial bodies in order to impose sanctions on states and individuals whenever necessary. Moreover, cryptocurrencies would enable the US to lend support to the movements involved in her policies, initiatives and agendas, and working against the regimes targeted by America, and would allow her agents to automatically exchange documents away from the surveillance of the regimes in the countries America wishes to destabilise and blackmail. Chief Strategy Officer at the Human Rights Foundation Alex Gladstein told Decrypt Website that: “In authoritarian regimes like Russia, the government has total control over the banking system, but doesn’t control Bitcoin.”
This is why Russian opposition activist Navalny has a cryptocurrency wallet through which he has been receiving donations from unknown sources, thus allowing him to nurture other encrypted wallets away from Russian security control according to Decrypt website.
What could be said in general concerning the initiation of the cryptocurrency market and according to the information available up until now is that the process is designed to incentivise and expand investment in cryptocurrency in order to justify governmental intervention, legalisation, control and dominion over the market. Hence, pressure groups have been working on two fronts:
1- Encouraging investors to inject cash into cryptocurrency markets exactly as they did at the beginning of digital technology in the nineties of the past century, so that they may finance a new market that will dominate private and governmental commercial transaction in the coming years. Statistics have confirmed that the flow of investments in cryptocurrency market has led to a spiralling increase from $200 billion in September 2020 to $1.1 trillion today.
2- Opening the floodgates for dealing in cryptocurrency in digital markets and in assets (vehicles and real estate), in order to impose their adherence to the prevalent corporate laws, which compels them to reveal and declare all transactions to avoid incurring sanctions and penalties. And this would enable the pressure groups from extracting the black market dormant funds and absorb them into the financial markets, thus enabling the government to monitor them.
The process aims also at generating a defensive mechanism to reduce the pressure on gold and immunise the dollar against the fallouts of inflation and competition from cryptocurrency. Hence, legalising cryptocurrency is designed to control it and turn its rivalry to the dollar into a support, cover and ally to gold at the same time, especially that the state of uncertainty caused by political, financial and economic crises, disasters, competition, and speculations has led many countries to shy away from banknotes and turn to gold; and in the last few years, some countries such as Russia, China and Turkey have increased their gold reserves.
The stimulation of the cryptocurrency market is deemed as a psychological preparation for the masses to accept financial dealing and exchange in a cashless society in the future, and to rely on electronic assets for their savings which have become a digital currency with a value exceeding the size of the banknotes in circulation. Recent statistics have revealed that the assets of the digital dollar have increased to $9 trillion as opposed to the $1.1 trillion of banknotes in circulation. This psychological preparation will eventually lead to accepting to shift towards cryptocurrency and digital currency, thus achieving the aims of digitising the transactions and the interests of the US.
6 Rajab 1442h
18 February 2021