The FT story on Hong Kong regulators pressuring banks to onboard crypto companies is revealing on two fronts. The first is the obvious one, China is pivoting hard into crypto.
This comes as a surprise to people who thought China "banned" crypto but that's a misunderstanding of how the CCP operates.
It was never about banning, but exerting control over a new industry. This is how State Capitalism works.
Freshly mined Bitcoin as moved through OTC trading desks became a bit too popular for evading capital controls, so the government "banned" mining: scmp.com/economy/china-…
But there were still anecdotal reports about a thriving crypto industry in China, including mining! Today China is widely believed to be #2 in mining with ~20% of global hashrate.
Obviously the CCP knows about this. And likes it.
More importantly they are using Hong Kong to embrace crypto in new ways: exchanges, stablecoins, etc. Why? Because they see that crypto is the future.
And because America is trying to kill it. The Biden admin's bumbling crackdown is the best advertising campaign.
America has a chokehold on global finance -> America hates crypto -> crypto must be a disruptive threat -> the rest of the world wants it.
The more America cracks down, the stronger the incentive for everyone else to adopt, particularly geopolitical rivals.
The second part of the FT story is how big banks remain hesistant to onboard crypto, even after their regulators told them they should.
This is not surprising. America's chokehold on global finance is enforced via the banking system.
This is why people like Jamie Dimon and Warren Buffet (major shareholder of multiple big banks) hate crypto. Decentralization threatens their source of power and wealth. fortune.com/2023/02/24/cry…
Bankers repeat the canard of "crypto is used for money laundering." But that's BS. Big banks are the preferred way to wash money.
Billions of dollars move through the likes of JPM and StanChart annually. It's easier to commit crimes through banking than Bitcoin.
Just google the fines big banks pay regularly, they are jaw dropping, but nobody bats an eye. AML fines are part of the cost of doing business.
So why do the regulators and politicians tolerate this? Because they too are playing a game. They don't actually care about money laundering, they care about having boogymen to campaign against and slap with fines to fund government bureacry.
It's all ridiculous. Wells Fargo was just fined $3.7B for some really shady shit, and nobody blinks an eye. @SenWarren and @BradSherman yell at bank CEOs on TV, but it's just an act.
The Feds could break up Wells or pull its licenses but this will never happen.
In fact with every passing crisis, supposedly anti-banking politicians like the current admin go out of their way to make Too Big To Fail (or stop money laundering) banks even bigger.
Obama did it in 09, Biden in 23.
Crypto violates this narrative on multiple fronts. That's why Chokepoint 2.0 happened, why they loved SBF and why Gary is doing what he's doing.
But it won't work because crypto is global. And the rest of the world sees the opportunity.
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