Letter #26: BlockFi Interest Accounts vs. the U.S. Government - Round One
It has been said that all publicity is good publicity. But when it comes to actions by regulators against cryptocurrency and the companies that operate within the space, that is, more often than not, a false statement. BlockFi is the latest crypto entity to be on the receiving end of a government's wrath, having received not one, but two different regulator inquiries in the last several days:
These actions by the states of New Jersey and Alabama demonstrate that the governments of the world have no intention to stop flexing their regulatory power against cryptocurrency, blockchain, and everything in between. There are likely a variety of reasons why governments rail against cryptocurrency. Regardless of the reason, their behavior should come as no surprise to seasoned participants in the space. After all, from its earliest days, the main ethos of many cryptocurrencies has been separation from control by any one government, company, or person.
In the short-term, these developments will be detrimental to BlockFi’s prospects. And they have already been detrimental to cryptocurrency markets in general as prices collectively shed an average of around 10% in the 36 hours after the initial announcement. However, there are many reasons to believe that, over the long-term, crypto financial services specifically and cryptocurrency in general will continue to flourish. Before we get into that though, let’s get a bit more background on BlockFi and what may have driven its recent regulatory woes.