As the crypto market starts to evolve and countries are starting to use it as legal tender, most countries are still figuring out what to make of it. On one hand, they cannot avoid it as a large distribution of wealth is now taking place.
On the other hand, they can’t yet find a reliable way to pluck it and play with it enough to tame it. It will be an interesting decade ahead of us.
Economic giants such as China have been aggressive in sweeping bitcoin from out of the country. A move that is puzzling both armchair and institutional analysts. Will America follow suit? That question is yet to be answered. One thing is for sure is that it will not be an easy battle.
The waters started to get muddled, as SEC chair Gary Gensler wants to regulate the $2 trillion crypto market.
An Uphill Battle
An ambitious move but not exactly surprising. It was going to come sooner or later given the upcoming disruption ahead of the financial market. It just happens that someone of his caliber is making it known that we should think more about regulating the crypto market.
Although this move might seem ambitious, he faces many uphill battles. All of them are going to be as exhausting and meticulous.
One that pokes its hairy head out is decades of securities law, especially the Securities Act of 1933 that dictates what he can do as SEC chair. He might find wiggle room to make some changes.
In order to materialize the entire vision, he might have to burn down the entire house of cards. Next, rebuild with new financial laws that map to our current society.
In recent times, Ripple came under heavy scrutiny from the SEC. They brought a case against Ripple Labs for distributing its digital currency that they claimed were illegal unregistered securities. The battle still remains in court. At this moment anyone with the skill to do it can create their own cryptocurrency. How will SEC or any country be able to regulate that?
If they charge persons who are performing crypto transactions, the populace could easily push it back underground. Initially, that’s where it was used and popularized with transactions of all sorts.
Decentralized Regulation
At the moment there are many cases for crypto regulation such as the inherent pump-and-dump schemes and whales that control large amounts of crypto assets. They can basically dictate the market to a certain degree given their large amount of holdings.
This year there’s been a growing trend, where the value of certain cryptocurrencies is directly correlated to a celebrity or a large business that accepts them.
The perfect example of this was Elon Musk, earlier in the year bitcoin (BTC) plunged on news that his car company Tesla Motors stopped accepting bitcoins. Additionally, during that time, the market was also sensitive to his tweets.
It was as if he couldn’t have said anything without some sort of reaction from the market. He was in the market at that point.
We could find cases where regulations can be fleshed out. But it shouldn’t be made within a vacuum which would normally have a handful of academics and industry leaders getting together in a centralized fashion and dictating the policies to their liking.
It should be decentralized to those who are involved in the crypto space. Initially, the main idea behind crypto is decentralization, thus it would be polite to follow that current model.
America’s current SEC chair will face a battle that will take a lot of stakeholders and time to get it right.
