Navigating the Wild West of Crypto

As we close out the year, an uncertain financial future looms and the volatile world of cryptocurrency is keeping us on our toes. With a pro-crypto president back in power, Bitcoin rising, Coinbase setting a new standard for compliance, and new policies exposing bribes and bad actors, a lot is in flux. Intelligo has the latest along with some pro tips on how to proceed. With caution, of course. 

With a new proverbial sheriff in town, a Trump administration means cryptocurrency is back on the front burner. A gold rush on Bitcoin, a surge of renewed interest on pro-crypto legislation as well as major shifts in government positions who govern crypto policy are signs of change. According to Nasdaq, “It's almost a foregone conclusion that a Trump presidency will result in a new pro-business regulatory environment for crypto. Already, SEC head Gary Gensler, who is widely perceived to be anti-crypto, has agreed to step down on Jan. 20. By the end of 2025, we could see the passage of sweeping new legislation that finally modernizes the U.S. financial system to embrace crypto. The House of Representatives has already approved the Financial Innovation and Technology for the 21st Century Act, so all that's needed is some political willpower to get a version of this legislation signed into law.” This new legislation could also lead to a change of hands in crypto regulation, moving authority away from the SEC and to the Commodity Futures Trading Commission. Changes in the governing body may signal changes in compliance regulations are on their way. 

Another move we could see under the Trump administration includes a strategic reserve of Bitcoin, serving as a national fund meant to protect our currency and whittle down our national debt. The plan, if executed, would entail the U.S. government purchasing $1 million in Bitcoin over the next 5 years, satisfying Trump’s goal to corner the global market by securing the U.S. as a superpower owning 5% of the total Bitcoin currently in circulation. Wyoming Senator Cynthia Lummis has brought forward the Bitcoin Act of 2024 which would set this plan in motion if passed. Other countries could follow suit. 

Meanwhile, Coinbase has reached an agreement with the NYDFS, setting a new precedent for compliance standards in the crypto space. Following an investigation, Coinbase has agreed to pay a $50 million fine for missing the mark when it comes to meeting regulatory requirements. They’ve committed to making compliance a top priority moving forward, matching the penalty with $50 million worth of investments in their compliance department over the next two years. According to Coinbase, “We view this resolution as a critical step in our commitment to continuous improvement, our engagement with key regulators, and our push for greater compliance in the crypto space – for ourselves and others.” As the industry moves towards greater transparency and compliance, actors in the space need to be prepared for greater scrutiny.

As Coinbase graciously takes their penalty on the nose, others are unable to put a positive spin on their missteps. Take BIT Mining (formerly 500.com) for example. Accused of bribing foreign officials (think the Japanese parliament) with cash, entertainment, and travel, the mining company was slapped with a $10 million penalty and its former top executive, Zhengming Pan has been indicted for conspiracy, bribery, and violating the books and records provisions of the Foreign Corrupt Practices Act, according to the Wall Street Journal. It’s no doubt nefarious activity and bad actors will remain under heightened scrutiny as crypto trickles into the global economy.  With so many moving parts influencing the crypto space, it’s hard to know what move to make, if any. Will it crash and burn again or finally receive its warm embrace by the U.S. financial system? According to Nasdaq, “All lights seem to be flashing green for crypto as we head into 2025.” Given the history of the crypto industry up until this point as well as the number of young founders potentially puffing up their resumes and pitch decks, thorough pre-investment vetting is an absolute must. Knowing who you are investing with is one of the best ways to protect yourself and your investments. Intelligo has the guardrails in place to ensure your investment decisions are as educated and risk averse as possible. Schedule your free demo with Intelligo today and let us provide the road map to make your most informed decision. Our suite of intelligent due diligence services will quickly get to the bottom of who you’re dealing with and any potential red flags, delivered digitally in an easy to digest report.