Cryptocurrency and blockchain have become serious disruptors to the traditional banking system, as seen by the rapid growth of Bitcoin and other prominent altcoins and infrastructure. As with any new technology, governmental authorities (specifically within the United States) have been trying to poke holes in this new system, threatening many projects with violating securities laws, regulations, and more.
This has been escalating particularly over the past few years with the likes of the SEC and politicians such as Elizabeth Warren. For the SEC, their crackdown on crypto has been ongoing but really made noise when the XRP lawsuit came to fruition in December 2021 (to my surprise as well). I also recently read a few articles on Elizabeth Warren’s stance, one discussing how she’s siding with the SEC and her anti-crypto stance as she runs for reelection this year, which could have a big impact on the industry as she claims cryptocurrency is dangerous and risky.
From what I’ve observed and read, there still seems to be a lack of transparency from the authorities on how cryptocurrency is and will be regulated, sparking concern and elements of fear across the general community. Government bodies are saying that there’s not enough regulation, while crypto enthusiasts and projects alike are pushing back, saying that it’s not necessarily needed and that a stake needs to be put in the ground.
My view on the matter is that regulation is necessary to a certain degree. If you’ve been around in crypto since the early days of 2017, you’re probably familiar with the ICO frenzy - tokens were launched by the hundreds where virtually anyone could get in, but many ended up being pump and dumps. Additionally, if you were involved in the industry in 2022, you probably remember the collapse of Terra Luna, a $43 billion ecosystem vaporized in under a week. These are classic examples that regulators use to argue their case, as many investors were hurt - either from their own lack of awareness or deliberate/malicious attempts to rug-pull investors from the project founders. Not to mention that there’s been money laundering, fraud, and other illicit activities.
This list goes on for the “need” for regulation, but there are also key factors to consider for the anti-regulation stance. The United States is known for harsh regulations across industries that operate within its confounds, which many argue stifles growth and innovation. Many in the cryptocurrency industry also claim that there’s not enough regulatory clarity, meaning they’re shooting in the dark when it comes to conducting business and everyday operations, making it hard to predict what’s coming.
Overall, I think it’s important to strike a balance that doesn’t stifle innovation and growth in this sector. While I believe some regulation is needed when it comes to protecting investors from scams and fraudulent activities, I’d prefer that overall regulation be limited to allow the industry to thrive and flourish.