How Should We Approach Regulation in the Face of Crypto’s Mainstream Breakout?
Regulation and Cryptocurrency don’t exactly go hand-in-hand. In fact, in the early days of Bitcoin, most of the community — composed of diehard libertarians — staunchly opposed any kind of regulation whatsoever. But now that the technology has hit the mainstream, opinions about regulation has changed. What no one has yet agreed on, though, is what kind of regulation crypto needs.
The opinions on regulation in this space are as diverse as the people who make up the community. Ideas on how to regulate cryptocurrency range from reasonable to extreme, from black-and-white to extremely nuanced.
However, when you boil these ideas down to their main parts, opinions on regulation can be broken down into three categories:
Keep it Old School: No Regulation Ever!
In the community, there remains a substantial group of people that oppose any regulation. As staunch free market supporters, they see any kinds of regulation as bad. Anything that should be protected or prevented when it comes to crypto — they say — will be taken care of by free market solutions.
Additionally, opponents of regulation often argue that cryptocurrency is resistant to financial laws by nature of its technology. Most cryptos are decentralized and pseudonymous, making it nearly impossible to apply any kind of rules to the people using them. Therefore, they say, trying to regulate this technology is a waste of time, because it won’t work.
Let Government Do Its Thing, But Not Right Now
The second category of opinions on this issue fall under a moderate label. This category maintains that blockchain and cryptocurrency should be regulated, but not right now.
These people argue that blockchain is so new that any attempts to regulate it would stifle its development. Such over-regulation could kill the technology. Blockchain supporters would consider death-by-regulation tragic, as the technology would become useless before it had the chance to help people.
If Crypto Can’t Be Regulated, Then It Should Be Banned
One the opposite extreme of the regulation discussion, some people believe cryptocurrency and blockchain should be regulated immediately. And if that can’t happen right away, then the technology should be banned before it becomes too harmful.
These people are often believers of the rumors that cryptocurrency is used almost exclusively for crime, such as money laundering and drug dealing. They believe the technology can be used for good, but without regulation it will continue to be dominated by criminals.
And so, when they call for bans in the absence of strict regulation, they are acting out of fear that an unregulated crypto market would allow crime to flourish and end up harming people around the world.
What’s the “Real Solution?”
Each of these thought categories carry a kernel of truth, but none of them hold the single solution to the regulation issue.
A total free market will allow crypto to become the best it can be, but it will leave a weak spot when it comes to protecting consumers from crypto-based crime.
Eventual regulation will allow the technology to flourish in its early stages, but it will still stifle further growth to some degree when rules are instituted. Also: how do we decide the technology has developed enough to be beneficial while complying with regulation? Wouldn’t it theoretically continue to grow bigger and better if allowed to operate in a free market forever?
Finally, immediate regulation would ease the fears of those worried about crime and violence, but it would stifle essential development in the short-term. Furthermore, outright bans in the absence of regulation will permanently snuff out any benefits the world could gain from blockchain and crypto.
Is There Even a Right Answer?
In reality, there may not be one. Eventually, the community will have to accept some governmental restrictions. That’s just how things work in the modern world — there is no such thing as a truly free market. Governments have claimed responsibility for protecting consumers and catching criminals, and they do that through the law.
Thus, we realistically will have to accept regulation, whether it is now or down the road. But we should still fight against outright bans, because crypto can fundamentally impact the global economy — even under the auspices of restrictive government rule. And while entrepreneurial resources will be wasted navigating the rules, they will at least be able to continue working on their projects.
The world isn’t perfect, which means crypto won’t be either when it comes to dealing with government. While we should fight tooth and nail for as much freedom as possible, we must accept that, eventually, concessions will be made.
So fight against bans and dispel the rumors of crime and violence, but don’t let the perfect be the enemy of the good. Demanding free markets to the point of radicalism will only make government want to stifle us more — even if we know that free markets are for the best.
Crypto will change the world, but unfortunately will have to play ball with government in some capacity so we can make a meaningful impact.
Do you think regulation is inevitable or do you think cryptocurrency will be able to circumvent it? Let us know in the comments below.
Images via ecsu.edu, knowyourmeme.com, Roger Ver