You simply cannot regulate crypto - but there's a but!
You simply cannot regulate crypto - but there's a but!
It's becoming extremely boring to see so many people talk about regulation each time they are given the stage, like maybe talk about something else - maybe fight for true decentralization and violating projects would face judgments, how's that for looking out for the ecosystem?
But we misuse words and feel it simply aligns, here's how we find ourselves deploying temporary solutions that eventually form a new problem - adding more fuel to the fire.
Proof of Reserves makes it through the US Congress?
United States Congressman Ritchie Torres has introduced bills in the House of Representatives to prohibit the misuse of customer funds by cryptocurrency exchanges and to require exchanges to disclose proof of reserves to the Securities and Exchange Commission (SEC). The short bills are intended to supplement other legislation that is passed on cryptocurrency, Torres said.
“A cryptocurrency exchange may not lend, leverage, or co-mingle the funds of a customer without the consent of the such customer.”
“A cryptocurrency exchange that holds assets on behalf of customers shall periodically (as determined by the Securities and Exchange Commission) disclose to the Securities and Exchange Commission information relating to proof of reserves of the exchange, including, with respect to the exchange at the time of the disclosure, the amount of assets held by the exchange compared to the liabilities of the exchange.”
And then, the problem with the story
“Crypto has a place in the American economy, but it must be carefully regulated,” Torres said at a press conference dedicated to the bills.cointelegraph report
Bill looks good, but the press comment? That's a dream every government wishes would come true.
How they are doing it all wrong
At this point, we really cannot argue much on the topic considering that there aren't any means of buying cryptocurrency directly with fiat without any limitations, local or cross border, this is why centralized exchanges will keep having the advantage, that's the leverage as it stands.
But then again, this doesn't mean that cryptocurrency is regulated, anyone who believes that is just stupid, and here's why:
A cryptocurrency is computer data, anybody can create it
As earlier discussed, cryptocurrency is a free market, the flexibility that comes with it is powerful, the focus on volatility and regulation is simply laying on the dried ground, and there are no possibilities for improvement or growth.
The Ethereum blockchain, the Hive blockchain via Hive engine smart layer, these technologies allow just about anyone to create a cryptocurrency by pushing a few buttons, tell me, how the fuck do you want to regulate that?
Are you going to set up a system that watches over all the data processed across these multiple networks? oh boy, that's a lot of data and they said "Bitcoin mining wastes energy" And even if one is to set up such a system, how do you know who creates what? There is no KYC on the blockchain and tracing transactions can be sacrificing years to a dead end.
But one would believe they don't have to track these creations and should simply go after the networks enabling these token creations, and that would solve it, right? Wrong! And here's why:
Blockchains are not companies but communities
Have you ever watched a protest? Why do you think people go out in multitudes to protest? Because you simply cannot do to all what you'd easily do to one, like putting everyone in jail, how then do you expect to make money from a country where everyone is in jail?
If that's too far off, think of high school students, when a member of a gang(not necessarily a bad one) gets in trouble and gets suspended, everybody raises to plead guilty for the same offense knowing fully well that they all cannot be suspended and so it would be unjust to suspend one and leave the rest.
This concept, falling back to blockchain defines "the community" aspect of the ecosystem, you simply cannot kill everyone. Given that blockchains are governed by communities providing resources to host these contents, not a company with a CEO that can be easily arrested and that's it for the business. It becomes difficult to kill the network because being able to identify and stop a participant doesn't mean the network will end, many other persons can simply step in and re-enforce the ecosystem.
Blockchain-based companies can be regulated
This is where the "but" comes in and what seems to be the one problem the ecosystem system is facing lately. Binance, FTX, Coinbase, Kucoin, and the rest, are companies and can, in fact, be regulated. The regulation of these businesses isn't a "crypto regulation" as many terms it. It is not a cryptocurrency that is being regulated but a company, so it just doesn't fit.
Events of the past have shown that the authorities' forced actions only harm cryptocurrency users not protect them, here's where we reflect back on how the SEC destroyed investors when they pulled through with the case against LBRY; the aftermath wasn't an investors' win, but a painful loss.
But again, the cryptocurrency itself wasn't regulated, and the company was stopped, but how do you stop networks with no CEO that solely decides on what goes in and what comes out?
The reality is that all attempts merely become a catalyst to instill fear in investors and slow the ecosystem's growth, it does work to some extent, but slowly begins to blur out because the reality is that economies function with greed, crypto gives everyone the ability to explore this greed, killing the old economic model in the process.
So much is happening that is laughable, but I guess that if one could still sit down and look up to the government for aid in the 21st century, some atom of power still exists in that system to flex, and here's why the authorities believe total regulation will be the end product so let's see how that goes.
Thank you and please leave a comment, your thoughts matter to me
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