Dark Money in The CryptoUniverse (Again)

By | May 28, 2021

In July 2017 I wrote an article about dark money and crypto.

Three years later, not much has changed, except the numbers have gotten bigger.

“Dark matter roughly makes up 80% of the universe. Or so the physicists say. We know – or think – dark matter exists because the galaxies stick together when there is not enough observable matter to keep them from flying apart.

“But there is no direct evidence of dark matter. All experiments to “prove” dark matter exists have ended in failure.
This brings us to the cryptocurrency universe, which observable evidence points to it being worth $100 billion more than $1 trillion dollars.”

Back then the amount of offshore money in the world – dark money – was estimated to be $20 trillion dollars.

Now it’s estimated to be as much as $36 trillion.
Nobody wants to talk about the impact of “dark money” on the crypto universe, but it’s there. And the influence of dark money is only going to grow.

Back in 2017, when the total market cap of crypto was only $100 billion, the asset class was literally not big enough nor liquid enough to absorb inflows from the super-rich offshore money. But now it is.

And now dark money doesn’t even have to take chance on the price of Ethereum and Bitcoin oscillating up and down.  

The market cap of US-denominated stablecoins is now more than $85 billion USD.

It’s not a question of whether there will be eventually $1 trillion USD of stablecoins issued, it’s a question of when.

And where are the regulators?

Well, I was at a virtual fintech conference two weeks ago, and a representative from a securities commission was presenting.

During the question period, I asked what the commission thought of Ethereum trading pools.
The answer I got, in a nutshell, was that they are looking at it.

I am thinking until the looking stops and the action starts, dark money is going to keep flowing into crypto uninterrupted, and nobody is going to say anything about it.

I’m not even sure what the regulators CAN do about it, if they ever decide to do anything. But that’s another story.

Until then, dark money (like dark matter in our own physical universe), will make up most of the crypto-universe but we will have trouble (or pretend to) finding evidence it exists.