It has been a while since I have talked about government regulation in the crypto world. The main reason for this hiatus is that it was a lot of people making statements in an effort to stay relevant, but, no action from the US Federal Government. Don’t get me wrong, I am for holding off regulation for as long as possible, so I am not saying these delays are bad. A recent hearing, though, has once again started discussion about by whom and how regulation should happen.
What is the reasons for this lack of movement on regulating crypto up to this point? It appears, in a rare move from government agencies, they are all claiming it is somebody else’s concern. Some regulators say it is a currency, others say it is a security. In the recent hearing, the House Financial Services Committee is once again trying to get a footing on the issue. On a positive note, Ron Hammond, director of government relations at the Blockchain Association, had this to say about the hearing:
“Today’s hearing was a good example of months of education on Capitol Hill. Both Democrats and Republicans asked good, pointed questions in regards to securities law, regulatory clarity, consumer protection, ransomware and fostering innovation in the U.S. This hearing was unique in terms of the number of Members of Congress who were vocally supportive of the technology and application of cryptocurrency versus those who were skeptical.”
Maybe we are just getting to a point where congress is starting to get a grasp of what crypto and blockchain technology is. My general thought that the reason no one is taking control of regulation is that, while staffers and some bureaucrats may understand crypto, members of congress and the heads of committees and agencies didn’t have a grasp on it. I can say without much doubt that Maxine Waters, ranking member of the House Financial Services Committee, knows as much about crypto as I know about…well, how to finish this analogy in a way to suggest she doesn’t know much.
I think one other item holding back regulation is that many in congress are just waiting to see what happens with crypto. There are some that are hopping it just goes away on it’s on. Others are hoping that it continues to regulates itself. Some just want to regulate it out of existence and make the issue go away. Finally, a few want to regulate it as a new entity as soon as possible, but, have not figured out how.
(One item on people hoping that crypto can just regulate itself is that those who have been buying and selling for some time are much more accepting of the risk than new players and intuitional investors. For this reason, it will not happen that the government lets it go unregulated indefinitely. The people with the money want some security.)
The main problem is still that until the major players (banks and institutional investors) know what the rules are going to be, crypto will not reach mainstream status. Crypto is new and is still evolving. The question is, will it evolve within a framework of regulation that the rich guys are comfortable with? The longer that question goes unanswered, the longer wait for across the board acceptance.
