Forbes: Dollar Dominance at Risk of Overthrow After Bitcoin ETF Launch, BTC Unstoppable

Bitcoin Spot ETF Approved for Listing: In addition to the potential positive impact on the price of Bitcoin, the more profound effect of the approval of a Bitcoin spot ETF in the United States is that it will be extremely difficult for the country to ban digital assets, thereby enabling Bitcoin to permanently drive the evolution of fundamental currency operations. This article is sourced from Avik Roy.
Article, compiled, organized, and written by Carbon Chain Values.
(Preamble:
Historic Moment: US SEC Approves 11 Bitcoin Spot ETFs! Full SEC Announcement, Summary of ETF-related Questions
)
(Background:
Arthur Hayes Shocking Full Text: The Truth About the Approval of Bitcoin Spot ETF
)
Table of Contents:
Why is Creating More Currency Popular in the Short Term?
Can the US Government Ban Bitcoin?
ETF Makes Banning Bitcoin Extremely Difficult
The US SEC Knows What It Has Done
What Will Happen in a Crisis?
Supporting Financial Reform
Discussions about the approval of the long-awaited Bitcoin spot ETF by the US Securities and Exchange Commission (SEC) have mostly revolved around how the SEC’s actions will impact the price of Bitcoin. However, this is only a short-term story.
The most profound impact of the ETF on the institutionalization of Bitcoin is that it will be extremely difficult for the US to prohibit digital assets, thereby enabling Bitcoin to permanently drive the evolution of fundamental currency operations.
Why is Creating More Currency Popular in the Short Term?
Fifteen years ago, when Satoshi Nakamoto published the “Bitcoin White Paper,” he reiterated people’s long-standing concerns about monetary political economics: governments have a strong political incentive to devalue their official currencies in order to achieve greater expenditure than income.
Increasing government spending is popular politically, while increasing government taxation is unpopular. Therefore, governments always try to increase spending without increasing taxes by borrowing, and when borrowing no longer works, they simply create more currency out of thin air.
In the short term, this is politically feasible because politicians can gain re-election by increasing spending on favored voters. But in the long run, an increase in the quantity of money leads to a decrease in the purchasing power of each unit of currency: in simple terms, inflation.
Satoshi Nakamoto and his colleagues are working to solve this problem by fixing the supply of Bitcoin at 21 million units. Unlike the supply of the US dollar, euro, yen, or renminbi, which increases over time, the total circulation of Bitcoin cannot be changed by politicians. In theory, this makes Bitcoin a more reliable long-term store of value compared to modern fiat currencies.
Further reading:
Bitget Celebrates the 15th Anniversary of the “Bitcoin White Paper” by Distributing BTC in the Streets
Can the US Government Ban Bitcoin?
If Bitcoin truly becomes a superior store of value compared to the US dollar, some people are concerned that the US government will ban this cryptocurrency. Ray Dalio, the founder of Bridgewater Associates, said in an interview with Yahoo Finance’s Andy Serwer in 2021:
As early as the war years of the 1930s, Dalio observed that the government was worried about people fleeing from the US dollar to gold, so:
Technically, the US government cannot ban Bitcoin, just like it cannot ban the internet. Bitcoin operates on a decentralized computer network that operates outside the jurisdiction of the United States. In fact, although China banned Bitcoin mining in 2021, the Cambridge Alternative Finance Center estimates that at the beginning of 2022, about one-fifth of Bitcoin miners’ power consumption still occurs in China. Chinese cryptocurrency traders usually use virtual private networks and other tools to evade law enforcement officers.
But this does not mean that the US government has no influence. In theory, the US can prohibit the exchange of Bitcoin for US dollars on mainstream exchanges such as Coinbase or Kraken. The US can prohibit mainstream banks from doing business with Bitcoin companies. The US can prevent companies like Microstrategy from having Bitcoin on their balance sheets through authorization from the US Securities and Exchange Commission (SEC) or accounting standards. The government may set up barriers to prevent retail businesses from accepting Bitcoin payments.
In other words, although the US cannot ban the operation of the Bitcoin network, theoretically, it can make it extremely difficult for mainstream Americans to use and purchase Bitcoin, just like Franklin D. Roosevelt’s ban on private gold ownership in 1933.
Further reading:
MicroStrategy Adds 16,130 BTC to Its Holdings, with a Floating Profit of $1.28 Billion! Issuing New Stocks to Continue Buying BTC
ETF Makes Banning Bitcoin Extremely Difficult
This is where the new Bitcoin ETF comes in. With a stroke of the US Securities and Exchange Commission (SEC), we can now see some of the largest and most powerful companies in the financial industry, including BlackRock, Fidelity, Invesco, and Franklin Templeton, holding billions of dollars worth of Bitcoin. ETFs allow investors who have never traded on cryptocurrency exchanges or privately held Bitcoin keys to immediately access Bitcoin.
This is important because it greatly expands the special interests that support and strengthen Bitcoin’s role in the US financial market. If you are a member of Congress who dislikes Bitcoin or an ambitious regulator looking to implement some restrictive policies I described above, you will not only hear the opinions of Bitcoin holders, but also the opinions of major financial players who have considerable influence in Washington.
Based on this, policymakers will find it difficult to actively restrict the use of Bitcoin. As someone who frequently deals with Washington, I can confirm the traditional view that special interest groups play a very important role in the policymaking process. Lobbyists are particularly good at opposing new policies that have adverse effects on their clients’ interests.
Currently, the amount of Bitcoin held in ETFs has exceeded $25 billion, of which approximately $1 billion was generated within two weeks after the SEC gave the green light to new ETFs. Even for financial giants like BlackRock, this is a significant amount of money.
The US SEC Knows What It Has Done
The US Securities and Exchange Commission understands all of this, which is why the approval of a Bitcoin ETF has been such a fierce battle. According to relevant laws of the US Securities and Exchange Commission, the commission’s responsibility is not to determine whether Bitcoin is a good investment, but to let investors and the market decide.
However, for the past 10 years, the US Securities and Exchange Commission has consistently resisted allowing investors to access Bitcoin through mainstream regulated tools. This is because the US Securities and Exchange Commission knows that its approval can greatly increase investors’ interest in digital assets.
The Securities and Exchange Commission only approved the Bitcoin spot ETF under pressure from a unanimous opinion written by Neomi Rao, a judge of the United States Court of Appeals for the District of Columbia Circuit. The opinion called the SEC’s resistance to Bitcoin ETFs “arbitrary and capricious” because the agency had already approved nearly identical products for Bitcoin futures and other commodities.
SEC Chairman Gary Gensler has repeatedly stated that Rao’s opinion forced him to act. Based on these circumstances, Gensler wrote in a statement, “I believe the most sustainable path forward is to approve the listing,” even though he criticized Bitcoin as “primarily a speculative, volatile asset that is also used for illegal activities, including ransomware, money laundering, evading sanctions, and financing terrorism.”
Two other Democratic-appointed members of the commission, Caroline Crenshaw and Jaime Lizárraga, voted against the listing of the ETF in January.
What Will Happen in a Crisis?
I have explained why the approval of a Bitcoin ETF makes it difficult for the government to ban the Bitcoin market in the US, at least in the foreseeable future. But what if the Bitcoin bulls are correct and Bitcoin rises to a level where it competes with the US dollar as a store of value? Will the US intervene and suppress Bitcoin?
They can try. But by then, it would be too late in practice. Take Argentina as an example. The Argentine government prohibits its citizens from exchanging more than $200 worth of Argentine pesos for US dollars each year. Despite this restriction, the Central Bank of Argentina estimates that Argentines hold over $200 billion in cash, accounting for 10% of the total circulation of US dollars.
Currently, the US federal debt is about $34 trillion, which essentially means there is approximately $34 trillion in government bonds in circulation. The liquidity of Bitcoin, that is, its appeal to large institutions as a store of value, may begin to compete with US Treasury bonds at a value of approximately one-fifth (for example, $7 trillion, which is about 9 times the current market capitalization of Bitcoin). As federal debt continues to rise, the threshold for liquidity competition will also increase.
However, according to the logic of the circular argument, Bitcoin’s market capitalization can only reach $7 trillion when it gains broader recognition as a store of value than it does now. By then, the US’s efforts to suppress Bitcoin are likely to backfire, just like Argentina’s current capital controls, because the suppression will send a signal to the global market that the US no longer believes in the inherent superiority of the US dollar.
Supporting Financial Reform
In the best case scenario, the US will solve its fiscal problems, particularly excessive spending on healthcare, and put its federal debt on a sustainable path. But before that, Americans can buy Bitcoin as insurance against the depreciation of the US dollar due to soaring federal debt. The US Securities and Exchange Commission has just ensured the long-term existence of this insurance.


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