It’s important to understand that nearly all consumer interactions with bitcoin happen through centralised entities who require domiciled entities within the United States for their continued access to payments infrastructure, banking and customers. The app itself relies on a third party service provider for exposure to the market and custody of the underlying assets, however the customers are not able to realise or transfer these underlyings and are only able to convert the marked gains in a virtual dollar account which is settled back-office in real dollars with the service provider. Most of the tokens these offshore exchanges offer are so-called “alt-coins”, with an underling economic structure effectively identical to that of a pyramid schemes (i.e. old investors are paid out by new investors). Tokens which have no corresponding legal entity willing to claim legal liability for development of the product (i.e Dogecoin) should be outright banned as they represent naked non-economic pyramid schemes and there is no societal utility in such schemes continuing to exist. These markets are highly manipulated by pump and dump schemes and are in aggregate are a net wealth transfer from victims to early stakeholders who manipulate prices, networks and exchanges for their own gain.
If there are any token companies which can stand on their own as regulated money transmitter businesses or technology companies then let them try, but with sane consumer protections to prevent the absolute madness and consumer abuse we see today. Outright banning bitcoin is a bit blunt and politically inconvenient, but the truth is that small, private and barely noticeable regulatory notices, minor legislation, and memos to infrastructure providers are all that is necessary to bring down the entire corrupt network to its knees so that it can no longer cause public harm. Shutting down these entities and legislating away the glaring loophole that allows US companies to hold these stablecoins would fix the crypto wildcat banking problem in the same way that Liberty Reserve was brought to heel. Payment interdiction is highly effective at bringing down internet crime and both Visa and Mastercard would no longer process card payments to these exchanges, which would effectively cut them off from nearly all customer inflows. Shutting off their inflows and capacity for redemptions would cause most of their market prices to crater as customers fled for the exits. It is an absolutely rubbish means of payment and most customers are simply looking to realise short-term gains in terms of Dollars and Euros as a result of zero-sum speculation on price movements, which is indistinguishable from gambling.
It is not necessary to destroy entire networks or every dollar interchange, indeed so long as there are two rogue entities running the software it will probably continue to exist but this does not matter. US companies wishing to launch domestic stablecoins pegged to the dollar should likely be brought under proposed Stablecoin Tethering and Bank Licensing Enforcement (STABLE) Act, which would require any prospective issuer of a stablecoin to obtain a banking charter, obtain FDIC insurance and produce publicly verifiable audits of the assets comprising the offering. This makes them particularly vulnerable to coordinated law enforcement and coercion by their banking relations and payments processor partners. It suffices to simply shut off the traditional banking on-ramps and off-ramps to make it difficult to gamble on, unprofitable to mine and economics will take care of the rest of the destruction without any heavy-handed efforts by lawmakers at all. With this entities lists served, none of the compliance departments in any off big four US banks would touch transfers from any of these foreign entities or their correspondent banking partners in Europe.
Right now there are two foreign entities that have been given free reign to print unbacked cash equivalents against the US Dollar without oversight of regulators or the Treasury. Since most of these markets are already thinly traded this would cause a massive run on exchanges back into normal currencies and would drain whatever holdings the exchanges allege to hold to zero, and causing most of the wildcat foreign entities without dollar accounts at the Fed to fold. The consumer interactions with all of these products is nearly identical to that of equities, people buying these tokens are investing a common enterprise and are led to expect profits solely from the efforts of the promoter or a third party. Doing this in software or on paper makes very little difference to the economics or consumer risk. They do so through consumer gambling apps (Robinhood Crypto, Cash App, etc) that present a casino-like interface that lets users gamble on the price movements of these hypervolatile pseudo-assets. This makes apps like Robinhood Crypto not significantly different than what would traditionally be called bucket shops in normal markets. For companies in the United States who have previously issued ICO tokens or alleged utility tokens there is already an existing framework for how to grandfather them into existing markets in a safe and regulated way: they should be forward-classified as securities.
