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Can global regulation keep up with the tokenization boom? | Opinion

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Imagine a world where everyday investors can own a part of underground oil reserves or a share in a skyscraper with the click of a button. This is the promise of tokenizing real-world assets—a technology poised to unlock trillions of dollars in traditionally illiquid markets like real estate, commodities, and infrastructure. However, while this innovation is set to revolutionize global finance, the regulatory frameworks needed to support it are often being outpaced by the rapid developments in this space.

Security tokens, such as those representing RWAs like property, commodities, or oil and gas, have the potential to transform how we invest, but they also come with strict regulations that need to be followed.

The growing market for tokenized assets

According to the Boston Consulting Group and World Economic Forum, the tokenized asset market is expected to reach 16 trillion by 2030. Another report suggested that the market value for tokenized assets could soar up to $10 trillion in a ‘bull case’ scenario or $3.5 trillion in the ‘bear case’ by 2030. This projection covers a wide range of real-world assets, from real estate to commodities like oil and gas, and demonstrates the growing appetite for fractional ownership models that allow everyday investors to participate in markets that were previously the domain of institutional players​.

Yet, for all its promise, the road to tokenizing these assets is paved with regulatory hurdles.

The challenges of fragmented regulations

Specifically, one of the primary challenges facing tokenization today is the fragmented nature of regulatory frameworks across different jurisdictions. While some countries, such as Liechtenstein and Switzerland, have developed clear regulatory structures for security tokens, many other key markets remain ambiguous or lag behind in defining how tokenized assets fit into existing securities laws.

For instance, the European Union’s Markets in Crypto-Assets Regulation, set to roll out fully by 2024, provides some clarity on how certain digital assets, including tokenized securities, should be regulated across the bloc. This kind of regulatory framework is crucial for establishing investor confidence and ensuring that these new financial instruments adhere to established legal norms. However, MiCA’s approach, while promising, is still limited geographically, and global markets remain fragmented​. Moreover, there is ongoing debate within the legal community about the interpretation and implementation of MiCA, particularly regarding its application to tokenized assets, underscoring the complexity of aligning regulatory frameworks with the rapid pace of innovation.

In other regions, regulatory ambiguity is more pronounced. In the United States, the Securities and Exchange Commission has signaled that many tokenized assets fall under its jurisdiction as securities. However, a lack of definitive rulings on specific tokens has left many in legal limbo, unsure of whether they comply with US securities law. This uncertainty poses a significant challenge to global interoperability—an essential feature for the widespread adoption of tokenized assets.

The role of compliance and security

The regulatory uncertainty surrounding security tokens is not just an issue of compliance but also one of security. Blockchain technology promises greater transparency and security, with tokenized assets recorded on an immutable ledger that can be easily audited. However, these benefits hinge on ensuring that the platforms facilitating tokenization are compliant with anti-money laundering and know-your-customer regulations.

A key consideration for tokenization platforms is following financial rules set by local and global authorities. To do this, many platforms use private blockchain systems or permissioned blockchain models to track who is using them and prevent illegal activities like money laundering. However, the lack of standardization across jurisdictions creates significant friction for cross-border transactions, a key value proposition for the tokenization of global assets​.

Additionally, ensuring the security of the blockchain infrastructure and the underlying assets remains a top priority. The potential for hacking, fraud, or mismanagement of tokenized assets could undermine the credibility of this emerging market. For tokenization to gain traction, particularly among institutional investors, robust security measures, transparency and compliance are essential.

Opportunities for innovation in regulatory sandboxes

Despite these challenges, tokenization platforms are already finding success by collaborating with regulators in regulatory sandboxes—controlled environments where they can test innovative financial products. In places like Singapore, the United Kingdom, and Switzerland, regulatory sandboxes have provided a testing ground for blockchain projects, allowing developers to identify compliance issues before full market deployment. 

For instance, Switzerland’s SIX Digital Exchange has successfully issued tokenized bonds in a fully compliant manner, demonstrating how traditional securities can be brought onto the blockchain. In May 2024, SDX issued a CHF 200 million digital bond in collaboration with the World Bank, further showcasing how traditional securities can be brought onto the blockchain while adhering to regulatory standards. ​

In Singapore, the Monetary Authority of Singapore’s regulatory sandbox has enabled projects like BondEvalue, which has tokenized government bonds, to test their platforms under regulatory supervision. In 2023, BondEvalue rebranded as BondbloX and expanded its platform, allowing bonds to be traded in smaller denominations and making bond investments more accessible to retail investors. These examples show that innovation and compliance can work hand-in-hand, laying the foundation for a more secure and accessible market for tokenized assets.

A path forward: Collaboration and global standards

Ultimately, the future of tokenizing real-world assets will depend on global collaboration between regulators, developers, and investors. Security tokens offer a tremendous opportunity to reshape how we view and access traditional assets, but this can only be realized if the regulatory landscape evolves in tandem with technological innovation.

A unified global regulatory framework may be the ideal, but in the short term, clearer guidelines from national regulators and further development of international standards like MiCA are essential. Moreover, establishing interoperability between blockchain platforms could ease cross-border compliance, enabling tokenization to reach its full potential in a decentralized global economy​.

For now, as both opportunities and challenges in tokenizing RWAs come into sharper focus, businesses must tread carefully. The winners in this space will be those who embrace both innovation and compliance, striking the right balance as the market continues to mature.

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Theo Crypto News

Công nghệ

Stripe reportedly seeking acquisition of stablecoin payment provider Bridge

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Stripe is reportedly in talks to acquire stablecoin provider Bridge, five months after announcing it will allow U.S. merchants to accept USDC payments again.

Multinational payments firm Stripe is said to be in talks with the Texas-headquartered stablecoin payments hub Bridge to expand its portfolio of crypto offerings.

According to a Bloomberg report, both parties are still engaged in negotiations, with no final decision yet made. As of press time, neither Stripe nor Bridge has made any public comments on the matter.

If the acquisition proceeds, Stripe’s position in the crypto market could be strengthened as it seeks to expand its services. In late April, Stripe President John Collison highlighted the benefits of crypto transactions, emphasizing their “instant settlement” on-chain and automatic conversion to fiat.

In early October, the company in a partnership with stablecoin issuer Paxos launched its “Pay with Crypto” feature, enabling merchants in over 70 countries to accept stablecoin payments that settle as fiat. Additionally, merchants can issue refunds by converting fiat currency back into stablecoins and sending the refund directly to the original payment wallet.

Founded in 2022 by former Square and Coinbase executives Zach Abrams and Sean Yu, Bridge allows its customers not only to accept and send stablecoins, but also settle funds in a made-from-scratch stablecoin, per the firm’s website. In August, Bridge secured $40 million in a round led by Sequoia and Ribbit, bringing the total raised amount to $58 million.

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Theo Crypto News

DeFi

86-year-old former attorney to pay $14m for role in crypto Ponzi scheme

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Disbarred California attorney David Kagel has agreed to pay nearly $14 million in restitution as part of his sentencing for operating a multimillion-dollar cryptocurrency Ponzi scheme that defrauded investors over several years.

According to a ruling by Las Vegas federal court judge Gloria Navarro, 86-year-old attorney David Kagel pleaded guilty and was sentenced to five years of probation and ordered to pay a total of $13.94 million as financial penalties for his role in the Ponzi that defrauded victims out of roughly $15 million.

Kagel, currently in hospice care at a senior facility in Las Vegas due to declining health, will serve out his probation under close supervision. Should he leave the facility, he will be required to wear a monitoring device.

Once a respected attorney, Kagel’s fall from grace is marked by his role in orchestrating a crypto Ponzi scheme that was operational between December 2017 and June 2022. Along with his accomplices, he lured victims with false promises of guaranteed high returns with minimal risks and the allure of AI-driven trading bots.

Using his law firm’s letterhead to gain trust, Kagel defrauded investors of millions, painting a picture of legitimacy that masked the fraudulent empire he helped run. Victims were promised returns of up to 100% within just 30 days of investment.

Kagel falsely claimed to hold 1,000 Bitcoin—worth $11 million at the time—in escrow to reassure investors that their funds were secure. Prosecutors further add that he lied about his past experience with cryptocurrency investments.

Kagel was permanently disbarred by the State Bar of California in 2023 after being found guilty of misappropriating client funds and failing to respond to multiple disciplinary actions, according to the State Bar’s official records. This marked the end of a troubled legal career, which had already seen his license suspended twice before—in 1997 and 2012.

His accomplices in the con David Gilbert Saffron, a resident of Australia, and Vincent Anthony Mazzotta Jr. of Los Angeles, were charged in December 2023, but they have pleaded not guilty and are currently awaiting trial.

Surge in crypto fraud

Crypto scams and Ponzi schemes have grown more sophisticated over the years and have become a recurring issue. In 2024 alone, several such schemes siphoned millions from unsuspecting individuals eager to capitalize on the hype surrounding crypto investments.

In June, a U.S. federal court ruled that Sam Ikkurty and his firm, Jafia LLC, operated a Ponzi scheme by soliciting investments from victims with false promises of high, stable returns and misleading claims about their trading expertise. Instead, funds from new investors were used to pay off previous ones, with the remainder misappropriated for personal use.

Similarly, in May, a Canadian crypto influencer Aiden Pleterski was charged with fraud and money laundering for his role in an alleged Ponzi scheme where he amassed $40 million from 160 investors, promising investments in crypto and foreign exchange markets.

Just weeks prior to that, the FBI uncovered a multi-year Ponzi scheme that defrauded victims of $43 million using similar tactics. 

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Theo Crypto News

Phân tích

Bitcoin hits 62k as FTX token, Beam, Shiba Inu soar after US adds 254k jobs in September

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Bitcoin and other altcoins held steady after the Bureau of Labor Statistics published encouraging September nonfarm payrolls data.

US nonfarm payrolls rebound

Bitcoin (BTC) rose slightly to $62,500 while Solana (SOL) jumped by 3% to $140. FTX Token (FTT) was the best top-100 cryptocurrency as it jumped by 20%. It has risen by over 80% from its lowest level this month.

Shiba Inu (SHIB), the second-biggest meme coin in the industry, was the second best-performing currency, rising by 10%. The other top performers were AAVE (AAVE), Beam (BEAM) and Celestia (TIA). 

According to the BLS, the American economy added 254,000 jobs in September, higher than the median estimate of 147,000. It also revised its estimate of August’s jobs report upwards to 159,000.

The unemployment rate retreated from 4.2% to 4.1% while wage growth rose from 3.9% to 4.0% in September.

These numbers came at a time when there are significant inflation fears as the crisis in the Middle East escalated, pushing crude oil prices higher. Brent crude has jumped to $78 while the West Texas Intermediate rose to $75.

Therefore, there is a risk that the Federal Reserve will not be as aggressive in cutting interest rates as was widely expected. In a statement on Monday, Sep. 30, Jerome Powell, the Fed Chair, noted that the Fed would be conservative when cutting interest rates. 

A hawkish turn by the Federal Reserve would be moderately bearish on risk assets like stocks and cryptocurrencies.

Traders are optimistic on Bitcoin and altcoins

On the positive side, most crypto investors are upbeat on Bitcoin and altcoin performance in October.

Historically, October and November have been the best two months for Bitcoin, according to CoinGlass. 

In a note, a crypto analyst noted that the best Octobers in the past few years started with some struggle. 

The other potential catalyst for Bitcoin and other tokens will be the upcoming US election in November. Historically, top assets do well after the election as investors embrace the new normal of the next administration. 

Meanwhile, most betters in a Polymarket poll with $147,000 believe that Bitcoin will rise to $65,500 this month, 7% above the current price. Many others see it rising to $70,000 this month. 

A Bitcoin comeback would lead to more gains by most altcoins like Solana, Ethereum, and Solana. It would also spur more gains in the meme coin industry.

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Theo Crypto News

Bitcoin

Sanctioned BitRiver sees Russia poised to surpass US in Bitcoin mining by 2027 with Kremlin’s support

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Sanctioned crypto mining firm BitRiver suggests Russia could soon outpace the U.S. in mining due to favorable regulations.

As U.S. presidential candidates increasingly highlight the importance of blockchain and crypto mining leadership, sanctioned crypto mining firm BitRiver is optimistic about Russia‘s potential to surpass the U.S. in Bitcoin (BTC) mining by 2027.

In an interview with state-owned news agency Prime, BitRiver CEO Igor Runets highlighted recent regulatory developments that have bolstered Russia’s standing in the crypto sector.

In early August, Russia’s President Vladimir Putin legalized crypto mining by signing new laws that exempt low-energy mining operations from restrictions. This legislation allows citizens using energy-efficient rigs to legally mine Bitcoin, further solidifying Russia’s position in the industry, according to Runets.

“The recent legislation supporting mining in Russia has further solidified our country’s position in this field.”

Igor Runets

The BitRiver CEO claims that Russia’s growth rate in crypto mining has caught up with that of the U.S. in the past year, narrowing the gap in absolute figures. Per his calculations, Bitcoin mining in Russia currently consumes over 2.5 GW of energy compared to more than 7 GW in the U.S.

Runets emphasized that the evolving regulatory environment is prompting oil and gas companies to reevaluate their strategies, fostering collaboration with Russian crypto miners. He expects the effective utilization of associated petroleum gas through data centers for mining will provide a significant growth stimulus, positioning Russia to outpace the U.S. in the crypto landscape within the next two to three years.

In April 2022, the U.S. government added BitRiver along with several of its subsidiaries to its sanctions list for operating in the technology sector of the Russian economy in an effort to isolate the country from the global financial system. The U.S. Treasury said at the time that crypto mining companies helped Russia monetize its natural resources, noting that Russia had a “comparative advantage in crypto mining due to energy resources and a cold climate.”

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Theo Crypto News

Pháp Lý

The real winner of the 2024 US elections will be crypto | Opinion

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Crypto is the darling of the 2024 elections, and I’m totally here for it. For the first time in history, two presidential candidates are actively courting the crypto vote. Donald Trump made his pitch at the Bitcoin 2024 Conference addressing crypto voters, which was met with an astonishing vote of support from the crypto community. Democrats, unwilling to concede the crypto vote to Trump, held a crypto reset meeting with prominent industry leaders and also launched Crypto for Harris.

However, in the not-so-distant past, many proclaimed crypto “dead.” The industry experienced a brutal crypto winter, losing over two trillion in market cap in 2022 and global scrutiny from regulators. Now, two years later, crypto has emerged as the dominant player in the 2024 elections. Game on.

The SEC’s villain origin story

Crypto’s ascension into a key player on the political stage is rooted in its antagonistic sparring with the US Securities and Exchange Commission. According to Binance attorneys, Gary Gensler approached Binance to become an advisor in 2019, but the company rejected his offer. 

Since 2021, there has been a considerable uptick in SEC crypto-related cases since President Joe Biden appointed Gary Gensler SEC Chair/Biden. Coincidence? I think not. Three court cases that truly establish the SEC as the chief crypto supervillain:   

  • Number one, in the Telegram court case, the company had to return over a billion US dollars from a token raise. Ushering the reign in of SAFTs, Simple Agreement For Future Tokens contracts, and the ICO boom in the US.
  • Number two is the Ripple Labs case, which ultimately found Ripple (XRP) to be a security on the institutional side but not a security on the retail side.  
  • Third, the BitMEX case, where the arrests of the founders of such top-tier exchange for AML/KYC violations, usually a slap on the wrist, shook the industry. 

The legal actions taken against these companies were like warning shots fired by the SEC, foreshadowing the heavy hand they would take towards major crypto companies.

The switch up: From a friend to a foe

Once crypto winter hit, after Terra Luna collapsed, public sentiment was that bad actors in space need to be removed and held accountable. Seizing on the opportunity, the SEC began its crypto crackdown, handing out Wells notices like Halloween candy, forcing some companies to divest from US operations or close up shop to stop the bleeding.  

Even companies once seen as allies became targets. The irony is that the SEC accused Coinbase of operating an illicit exchange. Coinbase has acted as a custodian of the US government, working directly with the US Marshals Service to sell Bitcoin (BTC) confiscated from the “illicit” website, the Silk Road. 

This is a rather strange “UNO reverse” move by the SEC since Coinbase is US-based, a BitLicense holder, along with being a publicly traded company.

Crypto fights back

A major noticeable change is the crypto industry has gone on the offensive, accusing federal regulators of refusing to create reasonable crypto regulations and guidelines for the industry.  Gemini COO Marshall Beard voiced his frustration in an interview with Bloomberg TV: “We’ve been asking for broader regulation, we’ve been doing this for a decade now, and the US does not have a broad crypto regulation framework.”

Key players in the crypto space beefed up government relations efforts by partnering with lobbying firms and donating campaign dollars to crypto-friendly candidates. Some have even hit back by counter-suing the SEC.

According to Open Secrets, a campaign finance tracking site, crypto political campaign contributions have dramatically increased from the 2020 election cycle to 2022. Nearly 50% of the corporate donations are coming from crypto companies.  To top it off, Fairshake is the largest Super PAC, crypto industry-funded, in this campaign cycle, raising over $200 million. Solidifying crypto’s dominance and influence in the 2024 elections.

Source: OpenSecrets

Key voting block in swing states 

Crypto voters are taking front and center in the 2024 US Presidential elections. Perianne Boring, CEO and founder of the Chamber of Digital Commerce, accurately predicted this scenario in a 2022 CNBC interview:

“I think that the watershed moment for crypto and politics is likely to be in 2024 and I think the next presidential election. The candidate that is able to figure out how to leverage blockchain to tap into the crypto community is going to be our next president.”

Political analysts anticipate the US Presidential election to be a very tight race, where small factions in the electorate may hold the key to victory. The crypto industry has taken note, going to painstaking lengths to position crypto as a wedge issue, collecting extensive data and research about swing voters. 

Data from a recent Harris poll suggests that one in five battleground state voters consider crypto a key issue. The industry as a whole has crypto voters who are very engaged, very active, and very aware of their power in the upcoming election. 

Stand With Crypto, a pro-crypto advocacy group, has already amassed close to 1.5 million online registrations. Their America Loves Crypto Tour is hitting five battleground states in September to increase crypto voter turnout.

Playing all sides to win

Crypto lobbying groups have pledged no allegiance to any side and actively donate to both Republicans and Democrats. However, that has not stopped crypto leaders like Arthur Hayes and Charles Hoskinson from weighing in on the elections. With some going as far as endorsing candidates. 

The Winklevoss twins have thrown their support behind Donald Trump, while Ripple’s co-founder, Chris Larsen, is backing Kamala Harris. Crypto industry visibility has surpassed anything seen in previous campaign cycles. It’s positioned its community as a key voting demographic so that candidates must earn their votes.

Regardless of which candidate wins, crypto has proven to be the real winner of the 2024 elections by coming back from a brutal crypto winter and an equally difficult assault from federal regulators: Going from being written off completely by mainstream media to artfully mastering DC politics, rising from the ashes like a Phoenix. 

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Theo Crypto News

Bitcoin

US seizes crypto domains connected to Russian money laundering scheme

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The US Department of Justice has seized domains linked to three crypto exchanges that have allegedly facilitated illicit transactions worth more than $800 million in relation to Russian money laundering operations.

The US authorities obtained court authorization to seize the domains of UAPS, PM2BTC, and Cryptex. Anyone who opens those domains will see a government notice indicating the site has been seized due to illegal activity.

In a statement published Sept. 26, the US DOJ charged two Russian nationals for allegedly pocketing millions from a prolific money laundering scheme built on a network of cyber criminals across the globe.

According to unsealed court documents, the DOJ accused Russian national Sergey Ivanov, also known as “Taleon,” of operating various money laundering services for cybercriminals, including ransomware groups and darknet drug traffickers.

Ivanov allegedly created and operated Russian payment and exchange services UAPS, PinPays, and PM2BTC, to process roughly $1.15 billion in digital asset transactions for money laundering purposes in the timeframe between July 2013 and Aug. 2024. 

Cryptex, another crypto exchange tied to money laundering, was also found to have facilitate transactions worth $1.4 billion, with 31% of them linked to criminal activity.

The US authorities seized the domains “Cryptex.net” and “Cryptex.one”. These sites were reported to offer anonymity to its users, allowing them to register for accounts without providing know-your-customer compliance requirements.

Similar to UAPS and PM2BTC, Cryptex was advertised directly to cybercriminals.

“Working with our Dutch partners, we shut down Cryptex, an illicit crypto exchange and recovered millions of dollars in cryptocurrency,” said Deputy Attorney General Lisa Monaco.

Russian national Timur Shakhmametov was also indicted for operating Joker’s Stash, one of the largest carding websites in history, which sold stolen credit and debit card information. Like Ivanov, Shakhmametov allegedly promoted Joker’s Stash website and its stolen payment card details on various cybercrime forums.

According to the press release, a cryptocurrency blockchain analysis revealed that approximately 32% of all traced Bitcoin (BTC) handled by these exchanges were associated with criminal activity. With more than $158 million Bitcoin connected to fraud, over $8.8 million was used for ransomware payments, and around $4.7 million originated from darknet drug markets.

Together with the DOJ, The U.S. Treasury has also sanctioned Ivanov and Cryptex. Meanwhile, the State Department offered a $11 million reward for information leading to the arrest of those involved in the Ivanov or Joker’s Stash operations.

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Theo Crypto News

DeFi

Financial freedom or false promises? Experts weigh in on the truth behind Trump’s World Liberty Financial

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Will Trump’s involvement in World Liberty Financial attract more investors, or will it increase the scrutiny on a project that is already raising eyebrows due to its controversial token distribution and governance? Experts weigh in.

Trump strikes again

2024 has been a whirlwind for former President Donald Trump, with his name frequently making headlines — not just for his political ambitions but also for his growing interest in crypto. The latest buzz? His newest venture — World Liberty Financial, which is set to officially launch on Sep. 16.

World Liberty Financial is positioned as a platform aimed at empowering everyday people by giving them more control over their finances. 

A recent podcast appearance by Trump confirmed the launch date, with WFL’s X page following up with an announcement: a live event from Mar-A-Lago on September 16 at 8 PM EST, where Trump will unveil the project’s vision for “making finance great again.”

Reports suggest that Trump has assumed the title of “Chief Crypto Advocate,” while his sons, Eric Trump and Donald Trump Jr., serve as “Web3 Ambassadors.”

The project’ goal is to disrupt the traditional financial system and offer decentralized finance as an alternative. However, skeptics are questioning whether this is a genuine attempt at financial innovation or simply another branding exercise by the Trumps to leverage their fame.

Concerns have also surfaced about the project’ legitimacy. Zachary Folkman and Chase Herro, both tied to the platform’ operations, were previously involved in Dough Finance—a blockchain app that was hacked recently.

So, what is World Liberty Financial really aiming to achieve? Will it live up to its promises, or is it just another play on Trump’ reputation? Let’s dive into the controversies and what industry experts are saying about this bold new crypto platform.

Behind the scenes of World Liberty Financial

World Liberty Financial, on the surface, promises big things—decentralization, financial freedom, and turning the U.S. into the “crypto capital of the planet.” But when you dig a little deeper, things start to look a bit murky.

CoinDesk recently obtained a leaked draft of the project’ white paper, and it raises some eyebrows. While World Liberty Financial may preach power to the people, the numbers suggest otherwise.

According to CoinDesk, a staggering 70% of WLFI—the governance token of the project—will be held by the founders, team members, and service providers. 

Only 30% is expected to be available for public sale, and even that isn’t fully going to the public. Some of the money raised from the sale will be funneled back to project insiders, with a portion set aside in a treasury to support WLF’ operations.

Moreover, the project’ plans appear to be far from finalized. A source close to the project told CoinDesk that while a draft white paper exists, the team is still figuring out the details.

“We’re not quite sure which version you are referring to,” said a representative of World Liberty Financial, noting that the official details would be released via their social media channels like Twitter (X) and Telegram.

In a recent X post on Sep. 4, World Liberty Financial made bold claims about its future, stating, “Our plan will speak for itself. The brightest minds in crypto are backing us, and what’s coming will make all doubters think twice.”

Another controversy revolves around the governance of WLFI tokens. According to the white paper, all tokens will be non-transferable and locked indefinitely unless protocol governance procedures unlock them.

But even this comes with legal caveats, as the white paper mentions that purchases will be screened to ensure they comply with U.S. sanctions laws.

Interestingly, the white paper refers to FinCEN, a U.S. Treasury Department office focused on financial crimes, but the reference seems to be an error. It should likely refer to the Office of Foreign Assets Control (OFAC), which enforces economic and trade sanctions.

Supporters of Donald Trump within the crypto community are also cautious. While they see potential in Trump’ pro-crypto stance, some worry that World Liberty Financial’ structure could backfire, especially if it turns out to be more about enriching insiders than creating a decentralized financial system for all.

WLF addresses concerns and social media reactions

In a recent X thread, WLF addressed the swirling rumors around its project, offering a mix of lofty promises and defensive remarks. 

As expected, WLF is framing itself as an innovative force in crypto, claiming that what it is building will have an impact not just on DeFi, but also on the future of the U.S. economy, especially with the upcoming elections. 

WLF highlighted its partnership with security firms such as Zokyo and PeckShield, a move that signals their awareness of the risks in DeFi. Given that DeFi projects are frequent targets of hacks, with millions lost each year, this could be their way of reassuring investors. However, their claim that “our code has been thoroughly reviewed” might not be enough to erase concerns. 

The thread also shed light on WLF’ mission to push the U.S.-pegged stablecoins as the world’ settlement layer, ensuring the dollar’ dominance for the next century. This idea of “crypto as the savior of the U.S. dollar” is ambitious, but some might find it overreaching. 

Stablecoins have been growing in importance, yes, but the claim that they will ensure the U.S. dollar remains the backbone of global finance is a long shot, especially given regulatory crackdowns and international resistance to U.S. financial influence.

The mention of foreign nation-states “attacking” the dollar adds a layer of political posturing to WLF’ financial goals. While it’s clear that WLF is trying to tap into nationalist sentiment to boost its project, experts will likely be watching closely to see how this narrative unfolds—and whether it gains traction.

While WLF’ Twitter thread paints a picture of confidence, the crypto community remains divided. 

Nic Carter, a well-known figure in the space, raised key concerns. He questioned whether WLF could actually damage Trump’ electoral prospects, highlighting the risks of it being hacked or targeted by the SEC. He described it as “at best an unnecessary distraction, at worst a huge embarrassment.” 

His worries aren’t unfounded—any mishap with WLF could become political fodder, and given the uncertainty surrounding its tokenomics and legal standing, it’s a valid concern.

On the other hand, supporters like Steve Witkoff see WLF as an opportunity for financial inclusion. Witkoff likened it to his own entrepreneurial journey, explaining how he once relied on a personal loan from his father to start his business. 

In his view, WLF’ DeFi platform could open doors for those locked out of traditional credit systems. “Our credit markets are the best in the world,” he said, “but still lock out many from borrowing.”

Ambition meets controversy – what experts are saying

As the dust settles around World Liberty Financial, the stakes couldn’t be higher. To understand the potential impact, crypto.news reached out to industry experts, and their responses were anything but sugar-coated.

Adam O’Neill, Chief Marketing Officer at Bitrue, weighed in on the implications of the Trump family’ sudden plunge into the crypto world.

“The Trump family launching their own crypto project through World Liberty Financial sends a clear message that crypto is on their agenda, and they’ll be looking to guide and nurture their project and the industry as a whole—at least on the face of it.”

However, O’Neill wasn’t about to let early controversies slip by unnoticed. He pointed out that the initial optimism is already being overshadowed by red flags surrounding the project.

“Even though so much of WLF is still shrouded in mystery, it’s already mired in controversy, with several hacks and scam campaigns causing monetary losses. The fact that 70% of the tokens are being held by insiders raises alarms—it feels more like an attempt to cash in on hype rather than a serious venture into the crypto world.”

That skepticism is shared across the industry. Yuriy Brisov, Partner at D&A Partners, didn’t hesitate to raise concerns about the concentration of power behind the project. For a platform touting decentralization, the numbers tell a troubling story.

“Seventy percent of WLFI tokens allocated to insiders contradicts the very principle of decentralization. It opens the door to market manipulation and suggests this project isn’t about revolutionizing finance — it’s about benefiting a select few.”

Brisov went even further, digging into the political implications of Trump’ involvement. Could this project become an ethical minefield if Trump returns to the presidency?

“World Liberty Financial raised red flags from day one. If Trump is elected, his family’ involvement in WLF could lead to massive ethics violations. This may spark new rules around conflicts of interest for political figures involved in crypto.”

With Trump’ name tied to it, World Liberty Financial could end up influencing more than just the markets—it could sway votes too. Suraj Sharma, Global Head of Public Policy at BitBNS, warned that the project might be a double-edged sword for Trump’ campaign.

“World Liberty Financial’ association with Trump could be a double-edged sword. While it might rally pro-crypto voters who see Trump as a champion of innovation, the regulatory scrutiny and security concerns tied to the project could reflect poorly on his governance style, especially his perceived leniency on oversight.”

O’Neill echoed this sentiment, cautioning that the controversies could severely damage both the project’ credibility and Trump’ image.

“For many investors, digital assets are their pathway to financial security. But with such a high level of insider control and the controversies swirling around WLF’ security flaws, the alarm bells are already ringing. This could seriously damage the project’ credibility.”

While the political and financial stakes are clear, the technical underpinnings of the project leave much to be desired. Mehow Popieszalski, CEO of MatterFi, critiquing the leaked whitepaper, offered a blunt assessment of the project’ innovation.

“The leaked whitepaper shows this is just an Aave on ETH project with some cut-and-paste coding. For something backed by a former president, it’s disappointing. We should be seeing groundbreaking technology, not recycled ideas. Trump’ brand might bring attention, but without serious tech innovation, this project risks becoming another failed DeFi experiment.”

As concerns mounted, Brisov once again referenced the potential legal challenges ahead. The structure of the project, he said, could draw serious regulatory scrutiny from U.S. authorities.

“The non-transferable tokens with a revenue-sharing model will likely be classified as unregistered securities. This could put WLF squarely in the crosshairs of the SEC, resulting in enforcement actions or fines.”

Adding to the legal complexities is the project’ murky approach to KYC and AML compliance. Brisov was quick to call out the risks associated with inadequate regulatory measures.

“Without stricter compliance measures, WLF risks violating existing financial regulations, leading to broader regulatory crackdowns in the DeFi space.”

With these mounting concerns, Sharma circled back to the potential political consequences. Trump’ deep involvement in WLF, he suggested, could alienate key voter demographics.

“While Trump’ core supporters might embrace the project, a large portion of the electorate could see this as a conflict of interest. The already blurred lines between business and politics only get murkier with WLF.”

Popieszalski offered a reminder of the technical challenges ahead, warning that hype alone won’t carry World Liberty Financial to success.

“A project of this scale needs a world-class team of crypto experts, yet what we’re seeing is a group with ties to failed DeFi ventures. That doesn’t inspire confidence, especially when you factor in the risks Trump’ name brings. If this project wants to succeed, it needs to deliver more than hype—it needs real, innovative solutions.”

Tổng hợp và chỉnh sửa: ThS Phạm Mạnh Cường
Theo Crypto News

DeFi

Congress battles over DeFi, while Trump’s silence speaks volumes

Để lại phản hồi

As Democrats and Republicans argue over DeFi, what message does Trump’s silence send to the crypto community? Is it a sign of disinterest or strategic neutrality?

DeFi gets the spotlight

On Sep. 10, the first-ever Congressional hearing on decentralized finance took place, marking an important moment in the evolution of this technology.

Titled “Decoding DeFi: Breaking Down the Future of Decentralized Finance,” the hearing was led by Congressman French Hill and lasted nearly two-and-a-half hours. 

U.S. lawmakers gathered to discuss both the potential benefits and risks that DeFi could introduce to the financial system.

The hearing exposed a clear divide among lawmakers. Republicans, led by Hill, were optimistic about DeFi’s ability to remove intermediaries and transform financial markets. 

As Hill stated, “by substituting intermediaries for autonomous, self-executing code, decentralized finance can shift the way financial markets and transactions are currently structured and governed.”

Meanwhile, Democratic lawmakers raised concerns, focusing on DeFi’s potential misuse, particularly its role in enabling criminal activity. While Republicans called for lighter regulations, Democrats advocated for stricter oversight, citing the risks of illicit use.

What does this hearing mean for the future of DeFi and the broader crypto market, especially with the U.S. presidential elections approaching?

A clash of perspectives on DeFi

The hearing itself turned into a battlefield of opinions, with sharp contrasts in how lawmakers viewed DeFi. The subcommittee chair, Hill, kicked off the discussion by focusing on the opportunities DeFi and tokenization could offer to finance.

However, not everyone saw it that way. Congressman Brad Sherman, a Democrat from California, took a more critical approach. He expressed concerns that DeFi might be nothing more than a tool for tax evasion, especially for the ultra-wealthy.

What we have here is an effort to liberate billionaires from income taxation… Every time a billionaire successfully cheats on his taxes, a member of the Freedom Caucus earns his wings.

In response to Sherman’s concerns, Peter Van Valkenburgh, director of research at Coin Center, provided a counter-argument. He acknowledged that tax evasion is a crime but pointed out that DeFi’s transparent, decentralized ledger makes it difficult for bad actors to hide their activities.

Tax evasion is a crime. It should be aggressively policed. I do not, however, think that tax evasion and its existence warrants a 100% surveilled and controlled financial system.

Van Valkenburgh also pointed out the confusion surrounding tax guidance from the IRS. He argued that many crypto users want to comply with tax laws but lack clear instructions on how to do so.

A difficult area in the cryptocurrency space has been getting clear tax guidance from the IRS on how Americans can pay their taxes when they earn capital gains, or perhaps their wages, on these networks

He added that criminals are more likely to use traditional financial systems to hide illicit funds rather than transparent blockchain networks.

On the other side, Mark Hays, Senior policy analyst at Americans for Financial Reform, painted DeFi in a less favorable light. He described the space as volatile and rife with scams, where investors often face devastating losses.

Hays stressed that DeFi should not get a free pass and that existing securities laws should apply to decentralized systems to protect investors.

Meanwhile, Amanda Tuminelli, the chief legal officer at DeFi Education Fund, took a different approach. She highlighted DeFi’s potential to democratize finance. According to Tuminelli, traditional financial systems rely on intermediaries, often acting as gatekeepers.

“Big banks can and do deny access to the system for discriminatory reasons or no reasons,” she stated, contrasting this with DeFi’s open-access nature. She suggested that anyone with an internet connection can use DeFi, calling it “the epitome of financial inclusion.”

Tuminelli argued that treating DeFi as traditional finance is not the right approach, as the underlying structures are fundamentally different. She suggested that regulations should take into account the self-custodial nature and transaction anonymity of decentralized systems.

Crypto left out of the presidential debate spotlight

Vice President Kamala Harris and former President Donald Trump faced off on Sep. 10 in the second presidential debate of the 2024 election. Despite Trump’s well-known pro-crypto stance, the debate avoided any mention of crypto entirely.

Instead, the focus was on traditional economic issues, with no reference to crypto, blockchain, or broader financial technology topics.

Harris’ strong performance during the debate appeared to unsettle Trump, particularly as he struggled to defend his position on contentious issues like abortion.

All of this seemed to affect the crypto market, as Bitcoin (BTC) dropped from around $58,000 to $56,000 after the debate. As of Sep. 11, it has slightly recovered, hovering around $56,800.

Ethereum (ETH), the second-largest crypto by market cap, also experienced a minor dip of about 0.5%, trading at around $2,340 during the same period.

In a surprise for Trump, who has long positioned himself as a champion of deregulated financial markets, his odds of winning, according to online betting platform Polymarket, fell from 52% before the debate to 50% as of this writing.

Meanwhile, a CNN flash poll reflected Harris’ dominance, with 63% of viewers stating she outperformed Trump. However, most respondents noted that the debate wouldn’t influence their vote in November.

As the campaign continues and the demand for a third debate grows, it remains to be seen whether crypto will finally take center stage.

What to expect next?

Throughout the Biden administration, Democrats have consistently been skeptical of crypto, highlighting the risks and pushing for stronger regulations. Amid this, Vice President Kamala Harris has remained silent on the issue, making her stance unclear.

Meanwhile, Trump, who once strongly opposed crypto, has shifted his tone in an effort to attract pro-crypto voters. In recent months, Trump has shown more openness toward blockchain and crypto on several instances. 

However, like Harris, he has remained silent when it matters most, such as during the Trump vs. Musk Twitter space conversation in August and again during the second presidential debate, where crypto was notably absent.

The future of crypto and DeFi in the U.S. remains uncertain. With the upcoming election, how the next administration handles this growing sector could have a lasting impact on both innovation and regulation in the financial space.

Tổng hợp và chỉnh sửa: ThS Phạm Mạnh Cường
Theo Crypto News