Cryptocurrencies have been enjoying an explosion in popularity over the last few years, but with the growth of the international cryptomarketplace has come the growth of regulations governing the creation of new tokens and transactions that could only be facilitated with them. Unfortunately, most crypto regulation in the United States is sorely underdeveloped where it needs to be robust and far too stringent in areas where it needs to be lax, resulting in countless innovative breakthroughs being stifled.
Current crypto regulations are sorely insufficient. Here’s why current rules and norms governing cryptocurrencies is hurting US companies, and why legislators need to take this issue more seriously for the wellbeing of the American economy.
Not all crypto-offerings are equal
It’s imperative to clearly establish that not all crypto-offerings are equal; some popular tokens like Bitcoin have huge numbers of fans and investors around the globe, whereas nascent tokens that are still trying to drum up an investor base are barely recognized on the marketplace at all. You may think this is obvious, but many legislators in charge with governing the marketplace have little to no idea about the myriad of differences that exist between various tokens like Ethereum and Facebook’s recently-announced Libra.
The House Financial Services Committee very recently held a hearing on “Oversight of the Securities and Exchange Commission: Wall Street’s Cop On The Beat” that was partially defined by Democratic congressmembers discussing Facebook’s forthcoming Libra. Democratic committee members like Representative Maxine Waters are not pleased with the social media giant’s effort to pawn off its own cryptocurrency on the public and have been actively attempting to stymie its creation. Unfortunately, this has led many other crypto developers to fear that they, too, could suffer from the wrath of legislators before ever getting a chance to compete in an open, fair marketplace.
Current crypto regulations are hurting US companies and diminishing the overall vibrancy of the cryptomarketplace by imposing stringent, universally-applied rules on everyone when in reality different standards are needed for different tokens and their providers. It goes without saying that entities like Facebook need stringent regulation when issuing digital forms of currency; after all, a company that IP theft, according to one intellectual property attorney, is understandable and legitimately going to be in the crosshairs of every regulator on the planet. To insinuate that all tokens are even remotely like Libra, however, or to treat their developers and providers as if they’re on par with one of history’s largest companies, is absolutely unproductive.
We need a mature, single regulator
The biggest problems are being caused by the fact that we lack a single, mature regulator who can govern the growing cryptocurrency market, which shows no sign of slowing down anytime soon. Bitcoin regulations and other norms regulating the cryptomarket are currently overseen by a diverse array of federal entities, including the SEC, IRS, and CFTC, to name but a few. When a multitude of regulators attempts to apply still-developing rules and regulations in a slipshod fashion, it’s only natural that productivity and innovation will be stymied as individual marketplace actors scramble to ensure all their legal bases are covered.
As cryptocurrencies become more widespread, this lack of a coherent regulatory body for the budding marketplace will only result in broader losses spread across the American economy. After all, a growing number of small businesses and large corporations are beginning to accept popular tokens as a means of payment, so a lack of a reliable regulatory framework could ultimately impact a much larger sum of transactions than many people would initially understand. Current crypto regulations are sorely insufficient, and US companies will continue to suffer until they’re modernized.