FluidFi builds the bridge between TradFi and DeFi, a neo-bank with access to savings and DeFi products
SEC chairman Gary Gensler was sworn in as a Securities and Exchange Commission member on February 3rd, 2021. Many considered him Bitcoin-friendly and great for crypto as a whole.
He taught a Blockchain and Money class at MIT and cautioned against overregulation in front of congress in 2018. Most of his comments on blockchain and crypto came off as bullish.
Gary once said, “This technology has real potential as a catalyst for change in the world of finance and the broader economy”.
However, he’s taken a much harder stance on crypto with his most recent comments that hint at overregulation of the industry in the US. When you take a step back and look around, politicians are starting to plant their flag on either pro-crypto or anti-crypto – The current administration in the United States falls on the side of anti-crypto.
They’ve made many hostile comments that hint at regulation so they can control it, regulate it, and tax it as much as possible. Doing so will no doubt stifle innovation and slow everything down to benefit the banking industry.
A highly controversial and invasive crypto rule recently snuck in at the last second into the $3.5 trillion infrastructure bill that would force developers to become brokers and track all their user’s transactions.
If you understand the technology behind DeFi, you’re well aware that this is an impossible task and will stifle innovation if enforced.
While there are still opportunities to stop it, the house voted to proceed without new amendments.
Gensler also appears to have changed his tone and continues to make comments about regulation, stablecoins, and investor protection.
Just recently, Gary Gensler has called stablecoins ‘Poker Chips’ at the wild west crypto casino. Additionally, the SEC is suing Coinbase and Blockfi for offering securities by creating a loan product that generates a much higher yield for their customers than banks do.
It’s especially odd because the SEC won’t return Coinbases phone calls and is essentially ghosting them until they go to court.
Stablecoins have always been controversial, with Tether a constant target for scrutiny from regulators. Many are convinced that Tether isn’t 1:1 backed by fiat. Gary refers to them as poker chips at the casino because it creates another psychological layer between you and your money.
The reason poker chips exist is for this very reason. People are less likely to make big bets with fiat than with plastic chips that feel like toys.
The psychology is real, making it much easier to gamble and lose your money at the casino.
However, the reason stablecoins exist is that fiat is too clunky to interact with the crypto ecosystem. Crypto and DeFi move too fast while the traditional financial system moves way too slow.
When money flows freely, it leads to an explosion of innovation and creativity – We’re in the middle of a financial and cultural renaissance because of crypto and are currently breaking out of a slow, clunky, and closed-off system.
While we agree that stablecoins need improvements (which is why fiatUSD was created), they are not poker chips. Poker chips were created to strip people from their money faster. Stablecoins were created because the current financial system is deficient.
Gary Gensler is also drumming up support for something called Investor Protection, which sounds very admirable.
On his Twitter profile, Gary has “committed to protecting investors & fair markets,” which is somewhat ironic when you consider the current banking system.
On the sec.gov website, it’s also mentioned, “We protect investors by vigorously enforcing the federal security laws to hold wrongdoers accountable and deter future misconduct.”
Investor protection is meant to protect the current banking industry, not the average investor.
Before DeFi, the only opportunity to earn more money at a bank for the average investor was bonus-hunting, which meant finding a bank that offered you a signup bonus for opening an account.
The banking industry is friendly to accredited investors with more money but keeps the average investor in the dark. If the average investor makes a mistake, the cost is high.
For example, the banking industry generated $12 billion in overdraft fees in 2020 – That’s a lot of money to charge a group of people already struggling with their finances.
Gary also just recently tweeted that if you’re just starting as a freshman in college, you should “start saving early, and save regularly!”
While this is excellent advice, it’s not so great when you’re only making 0.55% in your savings account. But, again, the margin for error is small when you only earn 0.55% on your money.
You can’t afford to make a simple mistake because it will cost you $35 each time if you overdraft! So the message from the banking industry to the average investor is don’t rock the boat too much because it interferes with us using your money to make more money. If you do, we’re going to charge you an arm and a leg.
You can’t even beat inflation with 0.55%. Additionally, the current banking industry is frightened of crypto. Once more people find a way to earn more yield, they will leave the banking industry en masse.
That’s a huge threat to the banking industry. We already know they don’t have enough money to cover a bank run. So imagine what happens when there's a mass exodus from savings accounts?
The battle for crypto is just beginning to heat up as it’s gotten the attention of politicians and regulators. This is both good and bad – We’ve gotten big enough for people to take us seriously, but now the attacks will accelerate.
Replacing banks with open source code that is community-built and managed is the best path to an open financial system. Our mission is to do just that. The SEC is already in a court battle with Ripple and now is bringing Coinbase and Blockfi, two of the biggest names in the industry, to center stage.
There’s a reason we are in Switzerland and going through all the necessary legal hoops – we want to make sure our vision of replacing banks with code lives on and creates a more open financial system for everyone involved.
FluidFi and fiatUSD exist because of the failures of the current financial system.
We offer higher yields than the 0.55% the banking industry does for their savings account. We also encourage financial education and taking control of your financial destiny.
We’re on a mission to replace banks with code to create a more open, permissionless, and trustless financial system.