Today we talk to Steve Bumbera founder and developer of the Many Worlds Token. Steven is Marine Veteran and an expert on Cryptocurrency
and how Crypto interacts with our US Government. We talk to Steve about SEC Chairman Gary Gensler, our current President Joe Biden’s, and his administration’s
take on Crypto. We also talk about the Regulation of Crypto assets and the heavy hand of the SEC in the upcoming months and years ahead. Hope you enjoy it.
Steven Bumbera Founder and Developer of Many Worlds Token
What has been the US-SEC’s response to the recent cryptocurrency meltdown?
They absolutely love it; it gives them all the ammunition they need to utter the terrifying phrase to “protect the investors”. There is nothing more bone-chilling than the SEC trying to protect investors, really what that means is an extreme barrier to entry, projects being unfairly prosecuted, and accredited investors being the only ones able to participate in the most beneficial aspects of crypto.
A prime example is their warning about centralized exchanges actually owning your crypto because using a digital wallet on the platform constitutes a transfer of ownership. There is a simple regulatory solution to this: require centralized exchanges to have consumers sign a document upon creation of an account that says, ‘Any and all tokens or coins purchased or stored on this platform belong to the consumer’.
Naturally, regulation will not look this simple but instead will turn into something that stunts innovation, and creates intense barriers to entry, meanwhile, the rest of the world will be leaning into mass adoption.
How has Gary Gensler been able to interpret President Joe Biden’s Crypto executive order?
I think he interpreted it as ‘you are the one and only agency responsible for calming the storm that is crypto, without you we will surely all perish’, or something to that effect. The executive order certainly did not attack crypto, it was actually quite bullish regarding mass adoption, but the SEC jumped in. Why? They aren’t just some big, evil group of people.
It’s a complete money grab. Think about it, we are talking trillions of dollars and all the SEC needs to do is win the argument that all crypto projects are securities, then they will overnight send an onslaught of fines and gain enormous wealth through it all. If that day ever comes, that will be the death of crypto in the United States.
There are plenty of countries far more crypto-friendly and willing to work with companies and projects on regulation and most projects will just move there. A final thing to note here is that Gensler vowed to focus on exchanges, well, tell that to all the investors of LBRY and XRP that surely feel protected by the SEC.
Is the US-SEC a crypto friend or crypto foe? What are your thoughts about this?
In its current state, unfortunately, and undoubtedly, they are a crypto foe. Now, I say in its current state because of its current approach. The SEC is an enforcement agency that is leading with enforcement. That is not what bleeding-edge technology needs.
That is not what the airplane needed, it is not what space travel needs, it is not what the Internet needed; it needs flexibility, room for error, and regulatory oversight, not a crushing heel for crypto to lie down under. It doesn’t need to be this way, really the agencies that are responsible for regulating crypto just need to approach projects and exchanges and say, ‘what did you do already, and what are you planning on doing next?’ then a conversation can begin as we slowly but surely figure out how to classify this asset (which needs a brand new class) thereby learning to regulate it, not enforce it.
It’s not too late for the SEC to cease leading with enforcement but I fear they are too far gone and detached from the reality of this technology. Perhaps when it is too late they will realize billions of dollars of revenue have just left the United States out of fear of the SEC.
What strategies is the US-SEC implementing to protect investors from the wild side of the cryptocurrency space?
Nothing really. Right now, they are expanding their workforce and are focused on exchanges and separating the custody of assets. These aren’t bad things to be working on, but how they accomplish it is going to be what makes or breaks crypto in the US.
How is the US-SEC adapting to regulating a largely decentralized industry?
They aren’t adapting well at all. They are trying to apply archaic and outdated rules to the most modern and bleeding-edge technology we have seen since the birth of the Internet. For instance, they use the Howey test to try to prove that all crypto is a security and falls under securities laws. This is a test from 1946.
Let that sink in for a moment that a rule just after World War 2 is now the primary platform by which they classify a technology built over 75 years later. Segregation didn’t end until nearly 20 years after the Howey test. I guess, in short, they are not adapting at all. They are merely trying to force something into an asset class that best benefits their agency, not the future of the technology.
Are there any multinational cooperative activities the SEC is involved in to help bring the industry under watchful eyes?
Not that I have seen, there is a lot of moving parts so I certainly could have missed something, but it sure seems like the SEC wants to regulate anyone and everyone regardless of where they are, which is difficult because it’s crypto and there really is no way to say ‘we just won’t sell to US citizens. Either way that ends poorly, either company leaves to another country and finds a way to not let US Citizens participate or they leave to another country and are still under fire from the SEC.
What gains has the SEC made in terms of the regulation and compliance of activities within the cryptocurrency space?
Money. Lots and lots of money. They are shoving crypto into asset classes that benefit their organization and there are no voices loud enough to stop them. If they are successful, every crypto project in existence and the trillion-dollar industry will be subject to paying fines, filing for exemption, or registering all of which equate to money for the SEC.
What mechanisms are being put in place for stemming the risks and potential losses that come with the cryptocurrency turf as a result of extreme volatility?
I’m not sure that I care. Wouldn’t it be nice to for once have an actually free market instead of labeling it to be free when it clearly is not? Extreme volatility is expected in crypto just as it would be expected in anything new or unknown. Let the people decide what risks they want to take and let the people decide if they want to put their money into something so volatile.
The beauty of smart contracts is projected can create environments to help keep things more stable such as adding liquidity to the project or a market maker service. However, they will likely only be as stable as the coin they are forked from regardless of their efforts.
What do the recent hirings within the US-SEC mean for the cryptocurrency space?
I hope it means that the SEC just made a bad investment because the rest of the government will pull on their leash and let them know they are going about this the wrong way. What it likely means though is that out of all the regulatory bodies, the SEC stands to benefit the most and is making a power grab to establish itself as a leading body that will participate in what’s happening. Make no mistake, they are simply taking initiative and it’s working.
I would much rather see the IRS step up, as a project I would gladly and proudly pay taxes to my country but would prefer to not be shut down, forced to leave my country, or watch an entire community fall apart because the SEC wants their power and money.
Are there any plans the US-SEC is making to oversee offshore cryptocurrency and web3 activities that affect retail and institutional investors?
Not that I have seen yet but that is certainly in the pipeline. I mentioned before that one of the problems of crypto is understanding where the buyer resides, so the SEC can easily point out Web3 projects that have US Citizens participating without anyone really fighting back or knowing. If there is even one IP address that connects to that app from the US, it opens the door for an SEC investigation.
What is the SEC’s impact on creating a safe space for everybody?
It’s terrible. There’s nothing worse than the phrase ‘to protect the investors. We are adults, it is our own money, we should be able to make and lose money at free will. I feel like I will forever be a child that has to ask for permission to build something innovative or to spend my money.
We already live in a system where our income is taxed by both the federal government and the state, then that money we have left after being taxed is taxed again when we spend it and when we want to invest, we pay capital gains tax on any money we made back.
This is all of course with barriers to entry such as pre-IPO investing which requires you to be an accredited investor. None of these taxes offer things like healthcare, education, housing, transportation, or anything; all of that is still paid for. This is what a safe space looks like. I’m tired of being safe. I would much rather take on the risk of my own tolerance that could result in the reward I desire.
How can the US-SEC police inflow into pseudonymous blockchains and ledgers?
So, they can’t. Well, they can but it wouldn’t be crypto anymore. This would require KYC before the purchase of an asset. So really what the SEC is trying to do is make the Stock Market 2.0 using crypto as the underlying asset for companies rather than stock. Don’t get me wrong, this is a great use case for crypto but it’s not the ONLY use case. There will be many different pockets of crypto, some of which require KYC.
Are there any plans to regulate privacy coins and their use by Americans?
Absolutely and understandably so. One of the pitfalls of crypto is the anonymous nature of it allows for illicit transactions and activities to take place with little to no way to prevent it. It’s an incredibly interesting debate which I find myself on both sides of depending on the day.
There’s something to be said about being able to spend your money privately without anyone knowing what you’re spending it on, or to be able to send money to a friend in need quickly and efficiently without a bank having the ability to say no. On the other hand, the cost of that privacy and freedom is extreme when it is used in the wrong hands.
Please can you tell us about the Many Worlds ($MANY) token?
Many Worlds is an idea, akin to a club or organization with the mission of helping bring on mass adoption by first building a bridge between the crypto world and the new world. From a technology standpoint, we have already delivered and are continuing to deliver on that front by having a FIAT to BNB on-ramp, education for the new folks, and real-world licensing and ownership in terms of IP, commercial use, and chain of custody. In addition, we have partnered with several entities that share this vision of streamlining the technology.
Our tokenomics get the honorable title of world’s first due to the unique leveling system in place. Your tokens begin to level the moment you acquire them, and each level is a new grade of membership within the DAO, each grade comes with more responsibility and more rewards.
The current project of the Many Worlds team is an NFT marketplace designed for beginners that allow for real-world licensing and chain of custody to occur on-chain, the marketplace has a large focus on music due to our latest partnership. Many Worlds intends to put a significant amount of attention to the entertainment side while helping other companies convert to Web3. It is hard to say what the forever roadmap is as that will be voted on and guided by the DAO.
Please, can you tell us about your career and how it prepared you for your current work with cryptocurrencies and their underlying technologies?
I was in the Marine Corps for 5 years as Signals Intelligence and Electronic Warfare in the Radio Reconnaissance Platoon. After that, I got into sales, marketing, and business operations before going to get my bachelor’s degree in Computer Science at the University of New Haven.
Following graduation and the beginning of my career, I fell in love with the markets and did a brief stint on Wall Street before realizing the amalgamation of my skills and knowledge is precisely what crypto is. So, I jumped right in and never looked back.
How is the current tokenomics system broken?
Well, any project that issues rewards in tokens is broken because it only ever benefits the earliest of holders. As the project scales, the rewards do not. The earliest of the holders get wealthy while the newest holders lose, the second they enter. A 14% tax on both the purchase and the sale of a token is absurd. That means the moment you are buying a token you are doing so knowing that you need a 30% return to break even.
What have you done with Many Worlds to create a new tokenomics system?
We did two things: First we created the world’s first leveling system which allows all the tokens in your wallet to have different intrinsic values and they interact with the smart contract differently. So, our transactional fee’s which we look at as membership dues, are 3% when you acquire the token and when you trade the token away the fee is dependent on what level your token is, scaling up, not down. The DAO also has control of the contract allowing votes to be made to reduce fees to 0% but never above the cap.
How will the US-SEC influence ICOs, STOs, and other Liquidity Generation Events (LGEs)?
I’m not entirely sure. It’s interesting times for sure because every project has its own story. Maybe you do a private ICO for USD, well that definitely fits the rules and regulations of modern capital raising or seed rounds. What if the project does their ICO in terms of DOGE? Or what if a launchpad like pink sale is used?
What if a majority or all of the funds raised in the liquidity generation event was just for that, liquidity? It’s one thing to raise FIAT so you can use it to try to grow the business to get your investors an ROI. It’s completely different for enthusiasts to donate crypto to a project to provide liquidity with no promise of an ROI. Beyond that, does BNB count as money? Is it a store of value? If money/cash/legal tender is not being used, then it should be of no concern to the SEC.
What advice do you have for newbies who have had their fingers burnt during the current meltdown?
If you bought into crypto to get rich, then welcome to your first crypto lesson. Just dollar cost average into projects you believe in. The risk right now is that when regulations start coming in most projects won’t survive. Even the big ones like Crypto.com, Coinbase, Binance, etc will be under the most scrutiny from the SEC so it really is a big risk all around. See how I’m offering no good news? That’s because crypto is not the thing to ‘invest’ in right now.
It’s the thing to support without expectation of an ROI if you see a brighter future ahead. If you’re a believer like me then investing and supporting are one in the same, but if you don’t quite feel as confident and you are approaching it solely from the lens of an investor, then this would be the absolute highest risk section of your portfolio.
As a believer and supporters of crypto, we are confident that we will make excellent returns on this technology, but if we are wrong, we will be glad that we offered the support for the growth of the technology until it was snuffed out by governments. Price and returns are irrelevant to the realist crypto enthusiasts, we just don’t want to get regulated out of building exciting projects and innovating the space and dare I say, the world.
Where exactly do you think the cryptocurrency space is going? Please, can you tell us about it?
Well, aside from some regulatory bodies decisions making, crypto is certainly here to stay. In what capacity is unclear, but it is certainly here. Governments will continue the development of the Central Bank Digital Currencies and from there is where things will get interesting. There are a few ways it can turn out:
- The government can turn away from the private industry and make it so any and all projects need to be forked off the CBDC naturally feeding all gas fees to the country of origin. This would cause a massive reset in crypto.
- The government could turn the private industry and make them have a peg to the CBDC.
- The government could let everything carry on as is but also introduce a CBDC into it all.
- The private sector could ignore government because the only way to shut down crypto is to shut down the internet.
So CBDC’s, stable coins, and engagement with the private sector are the things to watch from a ‘how this will all look’ perspective, from a technology standpoint the idea of crypto being able to fit the role of currency has been proven and now regulators are working towards making that happen legally.
Now, as developers, we are onto the next stage which is more use case and utility and a lot of that is going to involve NFT’s. So, let’s hope we don’t all get stopped trying to innovate before we can introduce yet another fantastic use case for crypto.