This tactical question has been brought up into light by the FTX explosion. There is no magic quadrant for this one. Cryptocurrency cannot be both a regulated asset and a disruptive technology. If you think crypto is a regulated asset, the smart move is to purchase Coinbase shares. 

A virtual currency, or cryptocurrency, is an innovative payment method developed utilizing encryption methods. By utilizing encryption technology, cryptocurrencies may act as both a medium of exchange and a digital accounting system. With the help of the internet and crypto, third parties are no longer necessary for transactions to be completed. Cash can be taken out. Cryptocurrency is only available online and cannot be withdrawn physically.

The largest market is entirely regulated by Coinbase. That investment, however, may not be prudent since there is something odd about using a centralized, controlled exchange as an entrance and exit point for decentralized permissionless networks. To hold someone responsible, regulators require a centralized permissioned network. Coinbase can be held accountable by regulators, but not Bitcoin. Even if you can control their on- and off-ramps, decentralized permissionless networks like Bitcoin and Ethereum are disruptive by nature. They cannot be governed.

Each bull market has a story that bear markets then disprove. That bear market refutation is refuted by the next bull market. Examine the market cycles for Bitcoin/BTC from 2009:

  • The main use case for ICOs in early stage capital raising was the 2017 bull market story, during which the price of bitcoin reached over $19,000. According to the bear market narrative, the majority of ICOs disappointed investors.
  • The story of the bull market in 2021 focused on institutional capital. Anarchic crypto suited up right about now. No more of those illogical ICOs, it was all about regulation. Another asset in the bubble that was everything was cryptocurrency.

The FTX story is all about regulation, yet it is not made clear who the regulator would oversee a company like FTX, which has over 100 locations across the world. A straightforward rule prohibiting a regulated exchange from exploiting client assets was implemented after legacy exchanges burst into flames, preventing further explosions. So long as cryptocurrency exchanges are subject to a single authority, this is simple.

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