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Many Americans were already disenchanted with cryptocurrency before prices plummeted this year and several high-profile companies failed. A Pew Research survey in July found that about one in six Americans had invested in or traded cryptocurrency at the time. But nearly half of those investors say the results were worse than expected.

Bankman-Fried decline even hit crypto confidence more difficult. Cryptocurrency investors big and small have already pulled out billions of dollars. The cryptocurrency market, which was rocked when FTX filed for bankruptcy in November, continues to struggle with wild price swings and low valuations.

One bitcoin, the world’s most popular cryptocurrency unit, was worth about $50,000 in January. As of Friday, one bitcoin was worth less than $17,000. Other cryptocurrencies have seen similar declines, with Ether and Binance Coin both losing more than half their value since January.

Still, many of Georgia’s ever-growing cryptocurrency businesses and miners see opportunity as a result.

“It’s an extremely positive development in the long run,” said CleanSpark CEO S. Matthew Schultz.

A cryptocurrency is a digital currency created and traded online. Unlike traditional money, it is not backed by a government or a bank. There are many types of cryptocurrencies, but the most popular are Bitcoin, Ethereum, and Tether. Cryptocurrency isn’t printed, but instead “mined,” a process where specialized computers solve puzzles to issue new coins and verify transactions in a code called a blockchain. Since the cryptocurrency’s inception in 2008, its market cap now hovers around $1 trillion.

CleanSpark is a Nevada-based Bitcoin mining company with four mining operations in Georgia. Bitcoin has advantages that other cryptocurrencies may not have, Schultz said. It is decentralized, meaning it is not controlled by a single party. “Every transaction is also publicly recorded and tracked in the blockchain code, discouraging fraud,” he said.

At the same time, FTX was centralized, controlling cryptocurrencies like FTT.

Bankman-Fried’s decline is part of clearing up the “confusion and confusion” of cryptocurrency, Schultz said. He hopes this will spell the benefits of Bitcoin for consumers and investors.

“I was at a conference and someone compared the FTT token to a bag full of IOUs from the movie ‘Dumb and Dumber,'” Schultz said. “It’s a huge victory to get rid of people like that [Bankman-Fried]”.

In October 2021, the Department of Justice announced its National Cryptocurrency Enforcement Team, which investigates the criminal use of cryptocurrency. Then in February, the department announced that the founders of cryptocurrency exchange BitMEX would pay $20 million for willfully evading an anti-money laundering program. Two days later, cryptocurrency lending firm BlockFi agreed to pay a $100 million fine after the Securities and Exchange Commission accused the platform of failing to register offers and sales.

Other companies have filed for bankruptcy, unable to withstand market pressure. Cryptocurrency hedge fund Three Arrows Capital fell in June following the collapse of two cryptocurrencies, Luna and TerraUSD. A month later, cryptocurrency broker Voyager Digital filed for bankruptcy. So did cryptocurrency lender Celsius Network.

These events and more are part of a larger pattern of cryptocurrency destruction, said Dan O’Pray, Bakkt’s Chief Product Officer of Bitcoin and Crypto. Bakkt, an Alpharetta-based company that offers an app to manage digital assets such as cryptocurrency, is one of the companies rocked by the fallout.

Bakkt shares were trading at $1.42 on Friday, down from an annual high of $7.29 in February. The company reported a net loss of $1.5 billion in the third quarter, and Intercontinental Exchange, which founded the company, recently wrote off $1.1 billion of its Bakkt. Bakkt announced this month that it will lay off 15% of its employees.

However, the market has a “short-term memory” and interest in cryptocurrency will return, O’Prey said. Bakkt survey has been published December 13 – held before Bankman-Fried’s arrest, but after FTX’s bankruptcy; found that only half of cryptocurrency users remembered the latest news in the cryptocurrency market. For the “cryptic curious”. or people interested in trading, that figure dropped by a third.

“[Bankman-Fried’s fall] it’s a good opportunity for entities that are well-led to step in, for the adults in the room to come in and fill the void,” O’Prey said.

“Wild West”

What remains uncertain is how cryptocurrency regulations may evolve.

On Wednesday, US Senator Elizabeth Warren introduced a bipartisan bill. reduce cryptocurrency crime. Among other things, the Digital Assets Money Laundering Act would allow the Financial Crimes Enforcement Network to label cryptocurrency companies as “money services businesses,” placing them under Bank Secrecy Act regulations. It also enforces anonymity by prohibiting financial institutions from touching “mixed” cryptocurrency, obscuring the parties to the transactions.

Credit: HYOSUB SHIN / AJC

Credit: HYOSUB SHIN / AJC

O’Prey said he welcomes “thoughtful” regulations for centralized cryptocurrency platforms. Schultz with CleanSpark argues that regulation is essential to Bitcoin’s growth, adding security that will appeal to consumers. Part of this process may even include taxation, he said.

But not all crypto users support regulation.

Richard Clark, an independent cryptocurrency consultant and host of the Bitcoin Atlanta Meetup, has been mining and trading cryptocurrencies for 10 years. He was first attracted to the currency because of the freedom that comes from traditional bodies like banks or governments, but regulations will end that, he said.

“[Regulators] go in after the rampage, count the bodies, chain someone up, say: “Oh, we caught him!” And then they expand their reputation,” Clark said. “All that regulation really serves is to stifle competition.”

Robert Daniel, a financial technology consultant at Georgia Institute of Technology’s Center for Advanced Technology Development, understands the regulatory fluctuations. Certain types of crimes, such as fraud, have always been punishable, but other cryptocurrency activities remain in an uncertain legal fog.

Good regulations are those that allow assets to flow as seamlessly as possible while protecting traders, Daniel said.

“It’s still kind of the Wild West,” he said.


What is cryptocurrency?

A cryptocurrency is a digital currency created and traded online. Unlike traditional money, it is not backed by a government or a bank. There are many types of cryptocurrencies, but the most popular are Bitcoin, Ether, and Tether. Cryptocurrency isn’t printed, but instead “mined,” a process where specialized computers solve puzzles to issue new coins and verify transactions in a code called a blockchain. Since the cryptocurrency’s inception in 2008, its market cap now hovers around $1 trillion.



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