[jyl]

If you’re a government looking for a way to reduce financial market froth with no or minimal impact on the real economy, you could do worse than to start with crypto “currencies”.

This bubble you can pop without doing anything to rates or QE or stimulus. If Musk can jerk BTC around with a tweet, imagine what governments can do with regulations and taxation – or by talking about doing the same, or just by talking about talking about it.

This is a bubble that most people – not most traders or crytofans, but most ordinary people – wouldn’t notice being popped. Tell them how crypto is used for crime, kills the environment, and makes shady billionaires (some of which is even true) and they’ll cheer on the pricking needle.

Your economic and security advisors are warning you that this baby needs to be killed before it grows. The warnings are more forceful in China, perhaps, but every government is going to be worried about its national currency being displaced by something that is incredibly volatile, dominated by anonymous persons from other countries, hard to track and tax, and beyond that government’s ability to issue or absorb. Oh, and the darn stuff is inherently deflationary too.

China will brook no challengers to its digital yuan. The US government may send subtler signals at first, but ultimately the musings of Yellen will turn into actual actions by the SEC, IRS, Congress etc.

BTC enthusiasts should be bribing, excuse me, contributing to Republican Congressmen as fast as they can. If they can make crypto into some financial equivalent of religion or Q'anon, they might be able to stave off regulation.