Bernstein analysts warn that political involvement in regulating cryptocurrency could discourage the decentralization of blockchain technology in the future.

The cryptocurrency market is currently in a critical growth phase that could significantly impact which blockchain technologies will be adopted by the mainstream. The fact that different countries are developing their own crypto policies is a clear indication that there is a need to update the decades-old financial systems. Notably, Europe, Hong Kong, Middle Eastern countries, El Salvador, and the Central African Republic have all implemented friendly crypto policies. However, the United States and Nigeria, among other countries, have been divided on crypto regulations.

Last week, the United States Securities and Exchange Commission charged Binance and Coinbase Global Inc (NASDAQ: COIN) with listing unregistered securities. SEC Chair Gary Gensler has argued that almost all crypto assets are unregistered securities, with Bitcoin being the exception. Interestingly, the Hinman documents, which have been used against the SEC in the Ripple lawsuit, depict that Ethereum was considered not a security by former top officials.

Bernstein Analysts on Crypto Regulatory Crackdown Dilemma

According to analysts at Bernstein, a private wealth management adviser focused on high net worth clients, the view that all crypto tokens, other than Bitcoin, are unregistered securities does not leave any room for blockchain networks to attain decentralization over time. Additionally, Bernstein analysts led by Gautam Chhugani think the classification of crypto tokens as securities does not leave room for tokens to have functional utility within the underlying networks.

“The core issue is whether countries should use securities laws framed decades ago without realizing blockchain networks’ very aim is to transform the decades-old financial and securities market systems, with more transparency, instant settlement times, disintermediation of middlemen, automation and reduced costs, global liquidity and interoperability,” Bernstein’s report noted.

The move by the United States SEC seems to have influenced the Nigerian SEC to regulate the crypto market in a similar manner. Last week on Friday, the Nigerian SEC ordered Binance Nigeria to cease operations for issuing trade of unregistered securities.

Combined, the United States and Nigerian governments control about half a billion people, which is more than 25 percent of global economic activities. Consequently, blockchains other than Bitcoin will have a challenging time ahead implementing the decentralization of their ecosystems.

Furthermore, Bernstein analysts concluded that the different crypto regulatory scope is splitting both the blockchain industry and countries into jurisdictions. Arguably, crypto projects could be forced to provide services in respective jurisdictions according to the different regulations.

Eventually, the fiat system will win through the Central Bank Digital Currencies (CBDCs) if the regulations continue to vary by jurisdiction. Nevertheless, the regulations in the blockchain industry were inevitable following increased scams and rug pulls. As a result, a faction of crypto enthusiasts has welcomed the crypto regulations as a means to mainstream adoption.

Nonetheless, blockchains will have a challenging time in the future rolling out their respective tokens as regulations get tighter.

We will continue to update Phone&Auto; if you have any questions or suggestions, please contact us!


Was this article helpful?

93 out of 132 found this helpful

Discover more


Unchained's Unbelievable Bitcoin Advisory Service to Woo Wealthy Clients with Financial Superpowers

Sound Advisory is launching a new service with a team of bitcoin-expert financial planners to assist affluent individ...


1005 BTC mined in 2010 on the move, awakening the Satoshi-era Bitcoin.

The vibrant Bitcoin community eagerly discusses the exciting movement of 1,005 BTC mined in 2010.


Thumbs Up from the Top Cantor Fitzgerald CEO Applauds Tether and Bitcoin, Professing as a Big Fan

The CEO of Cantor Fitzgerald on Wall Street, Howard Lutnik, has expressed his admiration for Tether, the company resp...


Onchain data shows that almost 90% of short-term Bitcoin holders are currently at a loss.

One observer noted that there is a notable increase in short-term holder supply during market downturns, which is typ...


🚀 Surprise! Bitcoin ETFs Soar, But BTC Price Responds with a Yawn 😴

CryptoQuant CEO Ki Young Ju has uncovered the true reason behind Bitcoin's recent subdued price movements, providing ...


The Bitcoin Buying Frenzy: Investors Go Crazy in the UK

The popularity of Bitcoin has led to a massive increase in worldwide Google searches for buying the cryptocurrency. I...