[DDIntel] The Crypto-Law War and Inflation Investing

Feb 18

**Strategic Analysis for the Future of the Luxury Super-Car Market, by Shachar Oz**

By taking enforcement actions against crypto platforms, some people believe that the Securities and Exchange Commission (SEC) is "regulating by enforcement." This indicates that rather than relying on existing regulations, the SEC employs its enforcement authority to develop new crypto industry regulations. As a result, debates have erupted regarding the SEC's appropriate role in regulating the cryptocurrency industry and whether or not enforcement actions go too far.

The SEC's success in winning cases against crypto projects has been attributed to the Securities Act, which was enacted in 1933 to protect less skilled investors from investment fraud, incompetence, and funds mismanagement. The Act mandates that businesses register their securities offerings with the SEC and provide prospective investors with certain information, including financial statements and other crucial details that may be used to determine the intrinsic value of the company. Additionally, the Act prohibits false or fraudulent statements during the sale of securities and stipulates civil and criminal penalties for violations.

Over a century ago, securities laws were enacted in the United States. Their objective is to prevent smart people from exploiting dumb, less informed or less educated people. They were created with the intention of ensuring that investors have access to comprehensive and accurate information about the securities they are purchasing so they can make well-informed decisions about their investments. As a result, the goal of securities laws is to protect investors from misleading or fraudulent statements and practices.

Securities laws, on the other hand, are more about deterrence than prevention because the government doesn't have enough resources to completely prevent fraud. Even if banking and securities laws did not stop crypto platforms from committing fraud in the first place, they will eventually be caught. The SEC is tasked with prosecuting securities fraud in its most potent forms. The SEC's actions to enforce securities laws against crypto platforms serve as a warning to other sector businesses that they will be held accountable for violating securities laws and must comply.

Is the SEC declaring war on crypto?

However, the US is not the only country to start regulating and adopting cryptocurrencies, as Singapore is getting into the “action” as well. The Payment Services Act is an effort to incorporate the cryptocurrency industry into Singapore's legal framework. Singapore has been involved in sector regulation actively. However, due to the distinct characteristics of cryptocurrencies that do not neatly fit within the existing legal definitions, some experts are of the opinion that this endeavor may be fruitless. Because cryptocurrencies, for instance, do not have a physical form and their value can fluctuate rapidly, it is challenging to effectively regulate and oversee the industry.

The fact that cryptocurrencies are not backed by any government or central authority is one of the biggest obstacles to regulating them. In the event of disagreement or fraud, this makes it difficult for regulators to determine who is responsible. There are also concerns regarding conflicts of interest because numerous crypto companies are involved in risk management, lending, and trading.

Although it is a step in the right direction, the crypto business licensing system in Singapore has some issues. Businesses may find themselves operating in a legal gray area as a result of the absence of clear guidelines for risk management and lending, for instance. Additionally, businesses have received licenses without adequate scrutiny, raising concerns regarding the efficiency of the licensing procedure.

Despite Singapore's admirable efforts to regulate the cryptocurrency industry, significant obstacles remain in the way. Conflicts of interest are a concern because it is difficult to classify cryptocurrencies in accordance with existing legal definitions due to the unique characteristics each crypto has. Even though the licensing system is a good place to start, more work is needed to make sure the industry is regulated in a way that is both responsible and effective.

Singapore and Crypto Regulations

On the other front of the “less digital” economy, there are important moves that everyone must be aware of. According to the most recent data from the United States, the macroeconomic environment will undergo significant changes in the near future. In order to deal with the various aspects of this new situation, we will need to start thinking creatively and outside the box - improvise, adapt, and overcome our current times.

In the business world in the 1970s and 1980s, things were pretty crazy. Due to serious energy issues, we went through a series of recessions. In essence, there was massive inflation as a result of the skyrocketing price of oil. To stay ahead of the curve and keep inflation under control, the Federal Reserve Bank did everything in its power. Interest rates were increased to a record high of 20% under Volcker. Although exhausting for the economy, it was an effective move. Inflation decreased from double digits to a mere 6%.

However, now we are living in different times. The US economy appears to be undergoing a significant shift as the Fed catches up with inflation. The majority of people believe that we will experience a mild recession, with the service sector remaining robust, though a few different scenarios could also occur. We've never really been in this kind of situation before, so there is no way of predicting what will happen, but only to make an educated guess based on accurate observations.

The job market has also been affected by the pandemic and the macroeconomic factors ruling the US and the world right now - there are some fundamental structural factors at play that are making things weirder than ever. The pandemic has shown common people that they can learn almost any skill, from the comfort of their homes, and also that they can work from home. The advantages of working from home are numerous for both the employees and the employers, reducing costs and time wasted on both sides. The new job market needs to adapt now, to a hybrid and remote environment, as more people opt for this, when possible.

The Big Flip?

With all of the important macroeconomic moves happening right now, you may wonder how you should invest and what you should be on the lookout for. For that, you can turn to one of the greatest investors of all time - Warren Buffett. He is known for taking a long-term approach to investing and concentrating on the underlying business value of the assets he invests in. He gives investors advice on how to deal with inflation, bear markets, and market fluctuations in general in his annual letters.

No matter what the macroeconomic situation looks like, investors should concentrate on the underlying business conditions of the assets they own rather than the current price of their shares. Instead of getting too caught up in the stock market's short-term fluctuations, you should focus on the fundamentals of the companies you are investing in, such as their financial performance, growth potential, and competitive advantage.

Buffett says that as an investor, you should change your perspective on inflation and focus more on real earnings rather than gains in the monetary value of the stock. Because inflation devalues money over time, it is essential to consider it when making investment decisions. An organization with real earnings that have consistently increased over time is likely to be a good investment during times of inflation because the value of its earnings should keep up with or exceed inflation. This means that your money should be invested in companies that make money during inflation, because as the company's earnings adjust to inflation, so will the stock price, and, more importantly, your money.