A startup needs a business model

When a startup wants to raise capital, venture capital representatives put the business model through in-depth scrutiny. Only a product from which reliable added value, customers and thus revenue can be expected in the future will be financed.

For going public, the company is once again rigorously screened.If a company wants to raise capital on the stock exchange in an IPO (Initial Public Offering), then a lot of rules have to be followed and hundreds of working hours of lawyers and financial experts go into this process before the stock can be bought.

Many Shitcoins don’t have a business model

In a PreSale or ICO (Initial Coin Offering) of a new cryptocurrency on a DEX (Decentralized Exchange), nowhere near this due diligence is done. At most, the SmartContract is audited.

The necessary due diligence cannot be afforded by all the small coins in the first place, because they have no real business model to generate revenue for them in the first place.

Most cryptos are securities, Bitcoin is a commodity

The SEC (Security and Exchange) sees cryptocurrencies as securities (not Bitcoin, which is considered a commodity because there is no initial issuer, but BTC is created through mining. Just like a commodity).

The point is that bitcoin is seen as a commodity by both the SEC and the CFTC (Commodity and Futures Trading Commission). This means anyone can start a miner and get BTC that way. Just like anyone can dig for oil or gold in their backyard. You don’t buy Bitcoin from an issuing organization the way you do with crypto tokens.

The SEC will crack down on cryptos

After the FTX scandal, the SEC will regulate the big exchanges and force them to trade only regulated securities. This will eliminate all the small crypto projects! Maybe a few of the big altcoins will manage to comply with the regulations. So ETH, MATIC, ADA and a few others, but not even with those it is certain that their whole corporate structure will even comply with the regulations.

Gary Gensler, the head of the SEC, has said several times that the rules are clear, and that crypto projects must also comply with them.

Crypto projects have so far been able to circumvent the SEC’s strict regulation in order to collect capital or rip off bona fide investors. The rules for public companies and securities do not exist for nothing, but precisely for the reason that fraud is to be prevented.

I’m bullish on Bitcoin — but I’m out of crypto

Therefore, Bitcoin is the ONLY major known decentralized blockchain cryptocurrency that will not be regulated by the SEC. Maybe there are a few other smaller ones, but they are rather insignificant to the market.

Gary Gensler doesn’t have to sue every single crypto project at all. He just needs to do that with the biggest crypto exchanges. If he forces them to follow the SEC’s regulation, then they would only be allowed to offer regulated securities. Thus, most of the trading volume would fall away.

Admittedly, altcoins can still be traded offshore or in the DeFi space, but the function of the major exchanges as an onramp from fiat to crypto will be gone! This makes it very difficult for fresh capital to come into cryptospace. Only to Bitcoin (and maybe a few other insignificant coins I do not know) it will still be possible.

For me, in any case, crypto is over since a few days, for that I am extremely bullish on Bitcoin!

BTC will get its place as a store of value, as a recognized digital asset class alongside gold, real estate, stocks, bonds and other securities.

Regulated by the CFTC as a commodity.

Stack Sats. ✌😎