When technology outpaces lazy politics, the FED spanks to delay the inevitable. Should they?
Published in · 7 min read · Jan 4, 2024
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If you’ve never heard of Coinbase Exchange,
you should know that she opened a somewhat safe gate into a strange new universe for those who’d only ever dreamed of investing in Bitcoin yet better left it for the clever and wealthy. This exchange lifted the veil off of Bitcoin and other Cryptocurrencies. Now, the secret lies open for everyone who wants to dive into novel opportunities and profit from them.
But old laws need refreshing
And so the Saga continues… as
again, Coinbase was blasted for its conscious effort to persuade the U.S. Securities and Exchange Commission (SEC) to broaden consumer safeguards. Strangely, they denied them and fixated on policies untouched since the Great Depression in the 1930s.
It seems ridiculous that in almost a century, nothing has changed. Even though emerging profitable options outside our traditional banking system are factual, decision-makers need to pay more them.
It‘s like poking my head into the Twilight Zone
and getting stuck among dotted black-and-white electromagnetic flicker — wondering how profitable it can be if the reigning establishment ignores tax-paying constituents' legitimate interests.
However, we can’t deny that policymakers face a significant challenge in controlling a steeply progressive runaway market and organizing the information gained carefully under its crumbling roof — especially when the traditional financial industry seems to work just fine.
Thus, it seems much easier for them to battle spirited companies in court instead of acknowledging favorable possibilities. But is it?
Let’s see. Long ago, rising internet usage and copyright challenges caused writers and artists to scratch their heads. Consequently, we were warned of copyright law, necessitating web s to feature royalty levels. Yet, the law itself neither needed to be adjusted nor renewed. Labels seemed sufficient.
But, in a blink, things got complicated: A programmer from hell
In 2008— a programmer from hell entered the scene and, on our behalf, placed digital dynamite under a manipulated and complacent financial machinery. Let’s call him Satoshi. Amid the evils of a raging bank crisis, he furiously designed the Blockchain and Bitcoin, a monetary system —so novel that it was independent of exclusive decision-makers.
Other programmers, like Vitalik Buterin, followed suit by building smart contracts on Satoshi’s virtual chain, which we use today. Also, it is worth mentioning that a computer scientist a decade earlier, in 1994, Nick Szabo, had already introduced digital contract terms. And, as we know from the physical world, contract terms can be anything—yet instant digital peer-to-peer fulfillment is a shift that fiercely rocks our centrally aligned fiscal and political order.
This makes me wonder: Why wouldn’t the political elite foresee the future in 1994 and plan accordingly? And—was there ever a Jules Verne to envision the Blockchain in Scifi?
Applying existing securities laws:
Applying existing securities laws to cryptocurrencies isn’t sufficient and creates uncertainty for investors and crypto companies alike. This, in turn, causes fear and stifles innovation and participation in the crypto market.
Coinbase filed its petition for rulemaking with the SEC in July 2022, arguing that digital assets could not fit into existing rules and, therefore, needed a new regulatory framework.
“The SEC rejected the petition, stating it has other regulatory priorities. Yet the agency brought over a hundred enforcement actions against crypto industry participants this year,” Selig told Blockworks.
Laws work fine—nothing changed…
how foolish is it to pretend that nothing has changed? Over time, we’ve seen precious metals morph into paper, then plastic —and what a shocker — are now slipping into the digital realm, which is literarily pulling the rug from under a centralized fiscal sector alongside a burgeoning global decentralized one.
And as much as Elizabeth Warren and some of her fellow politicians and the bank industry would want to wish it away, the energy surrounding the technology and its social implications can’t be ignored anymore.
After all, the blockchain offers financial incentives that benefit humans regardless of where we live or how disadvantaged we might be. Unthinkable, nine decades ago.
Circle IPO: Circle is most well known for creating the popular stablecoin USDC. It is the 7th largest crypto by market capitalization and the 2nd largest stablecoin by market capitalization, coming in at $24.5 billion. Source: Cryptnation Newsletter
The upcoming implementation of the Markets in Crypto-Assets Regulation (MiCA) across the European Union in 2024 makes me optimistic about advancing the crypto and blockchain ecosystem globally. — Paul Brody, Global Blockchain Leader, EY
Let the Experts speak: Coinbase and Clients.
Instead of assembling a team to modernize policies and cooperate with leading experts of central exchanges like Coinbase and others and their clients, Senators Marshall and Warren prefer collaborating with big banks hoping to smother the crypto space. Yet, the solutions they might come up with are only patches and can’t stop the bleeding.
Major financial institutions collaborated with U.S. Senators Roger Marshall and Elizabeth Warren to formulate a contentious anti-crypto legislation, as a video surfaced on X on 20 December. Senator Marshall acknowledged that he sought assistance from the American Bankers Association, the primary lobbying entity for the U.S. banking industry, in crafting the Digital Asset Anti-Money Laundering Act. Source: email — Unhashed
Not how Satoshi wanted it done…
Yes, crypto is here. And for obvious reasons, the dollar will eventually be replaced — by a centrally calibrated digital currency, certainly not in ways Satoshi had in mind. What makes it more challenging for our government is that there’s no denying that nations worldwide embrace crypto's decentralized possibilities, especially in times of economic decline and depreciating value of the U.S. Dollar and other dominant currencies.
It’s not like we’re sitting on the couch, watching AVARTA,
where a hero is defending a beautiful far-away planet from the brink of exploitation. In our humble world, we still breathe and experiment with the possibilities as our future unfolds.
To encourage responsible innovation and usage, regulatory bodies must stay caught up and adjust their rules to accommodate new technologies. Failing to keep up with technological innovation can only lead to regulatory arbitrage, where entities exploit gaps, potentially harming investors and the market.
Laws grew naturally out of necessity to protect bank depositors and investors during the Great Depression. Isn’t it time to overhaul outdated rules and develop new branches to the old tree that governs? And for the SEC to start moving in tandem with an unstoppable and rapidly evolving future? So, the regulatory environment remains robust, relevant, and conducive to the healthy development of new financial markets and investor protection.
