Kevin O’Leary Claims Crypto Faces Regulatory FUD

The Sword of Damocles which explains that there is ever-present danger for those in a position of power, originated from a legend out of ancient Greek mythology. Damocles was a soothsayer to king Dionysius who wanted nothing more than to be king himself, if only for a day.

Dionysius granted him his wish, but as Damocles sat on the throne, he saw that the king had hung a sword above it, held only by the hair of a horse.

In this manner the ruler wanted to make clear that to be king is indeed good and luxurious, but also comes with peril.

As the cryptosphere grows ever further and faster, regulatory threats are spreading FUD (Fear, uncertainty and doubt), or in other words, as crypto becomes more successful, dangers await it. We explain.

Armstrong and Mnuchin

It all started shortly after Bitcoin neared the $20k level again this year, at the end of November. For the first time since 2017 Bitcoin made all the world’s headlines in a positive manner.

As most analysts realized this time round was quite different from the ICO bull run (2017-2018) given that institutional money was pouring in. Fears were quickly raised for a first time when Coinbase CEO Brian Armstrong said on Twitter that he had heard rumors that the US Treasury Department, led by Trump crony Steve Mnuchin, planned to let crypto regulation with regards to self-hosted wallets enter into force before the Republican President’s term would end in January 2021.

Last week we heard rumors that the U.S. Treasury and Secretary Mnuchin were planning to rush out some new regulation regarding self-hosted crypto wallets before the end of his term. I'm concerned that this would have unintended side effects, and wanted to share those concerns.

— Brian Armstrong (@brian_armstrong) November 25, 2020

When the new rule was published this month, Cardano CEO Charles Hoskinson reacted in disgust and said:

Thanks government. I can’t say go fuck yourself any stronger. You all ask why we build in Africa? Because the real corruption is right here in the United States. Soon every wallet in America will need an identity associated with it. Brought to you by an unelected, outgoing T-Sec

It was a first shot across the bow.

Facebook and the banks

The second warning came from Facebook that is still planning to roll out its own cryptocurrency next year, in the form of stablecoin Diem. What, you thought it would be called Libra?

No, Facebook decided to go with a name change so that Diem would not automatically make everybody think of Facebook. Whether this will fool the regulators and banks who are fearful of Zuckerberg’s wide reach for his stablecoin remains to be seen.

Expect many warnings in classic media surrounding this in 2021.

XRP and Kevin O’Leary

December brought an SEC investigation for XRP and threats from both Nouriel Roubini and Kevin O’Leary.

The lesser known Shark Tank investor (he is always compared to Dallas Maverick’s owner Mark Cuban, who is the star of the show) recently debated Bitcoin bull Anthony Pompliano on CNBC about the December stellar rise of crypto.

O’Leary stated:

There is no evidence that has a reverse correlation to correcting markets. Last March, if you owned Bitcoin, you got slaughtered, and you had a lot more volatility than the S&P.

I love to talk about it, it’s fun to watch it go up and down, but during the day, when the bell rings, I don’t talk to anybody that’s worried about this.

Furthermore, Kevin made the case that the reason most funds are still hesitant to enter is because:

They fear the regulator. And watch what happens one day, and I’m waiting for this one. I’m waiting for the day that one of these regulators comes down hard on Bitcoin. Grown men are going to weep when that happens.

The regulatory threat indeed hangs like a sword of Damocles. We can only hope that horse’s hair holds it together.

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