The regulation of the US cryptocurrency market is at a tipping point. In this regard, many companies operating in the cryptosphere still complain about the lack of clear rules regarding the work with digital assets.
To date, the crypto exchange Coinbase and the issuer of the altcoin XRP Ripple Labs have entered into a confrontation with the main financial regulator of the United States called the Securities and Exchange Commission. At the same time, plans for a new stablecoin control plan are being actively discussed behind closed doors.
According to former financial regulation expert and Coinbase executive Brian Brooks, governments are still taking the wrong approach to cryptocurrencies. And that’s why.
Note that this is not the first time experts from the blockchain world have commented on the topic of cryptocurrency regulation. For example, in July 2021, the founder and head of the Binance crypto exchange, Changpeng Zhao, supported the prospects for active intervention of regulators in the coin niche. According to him, it is the growing number of rules for working with digital assets that will allow the latter to become globally popular.
As noted by Zhao, this will affect the reputation of the cryptocurrency industry, which is still far from positive in the eyes of many people. At the same time, the entrepreneur stressed that the regulatory infrastructure itself should be transparent.
How regulators view Bitcoin
Brooks said that applying tough regulations from traditional finance to the crypto industry would be like “demanding a license from a kid selling lemonade.” During his presentation at the SALT Conference, Brooks shared his experience in this matter.
Here is a comment from an expert in which he shares his attitude to what is happening. The quote is from Decrypt.
I did not start directly with regulation itself. The first question is “what are you doing here and what aspects of your activities really should be monitored?” I would not support a prejudice that requires immediate regulation in accordance with the principles of the banking business.
That is, the expert believes that regulators, first of all, should abandon the idea of applying old approaches to such an innovative niche. Accordingly, to begin with, they need to develop a new regulatory framework that would better fit into the current conditions of market development.
Former regulator Brian Brooks
The main difference between crypto and ordinary finance: a lot of things here depend on the code, and not on people directly. This has its own logic, however, cryptocurrency products are still developed by people in the same analogy as new bank policies are adopted by their management.
According to sources, Brooks offers his own way of regulating the crypto industry. He wants to focus on rules for compensating potential losses of investors and tough cybersecurity regulations. That is, in fact, to give freedom to developers, but also to protect newcomers from possible losses in the market.
We believe that this is a very profitable strategy for the development of the cryptosphere, because hacker attacks and huge losses from the activity of scammers are currently one of the main problems for the image of Bitcoin and the cryptocurrency industry as a whole.
There was another guest at the event – Brett Tejpole, head of Coinbase’s cryptocurrency sales, trading and storage department. He said that a few “brave” companies would still be subject to financial regulators’ scrutiny. In its 25 years of experience working with banking giants such as Barclays and JPMorgan, Tejpol has never seen a clear path for regulators to begin innovation. At the same time, everything new in the world of finance will soon inevitably involve the control of state bodies.
Coinbase spokesman Brett Tejpole
As the standoff between Coinbase and the SEC continues to gain traction, we can only hope that the Securities and Exchange Commission will take a softer approach to regulating the cryptosphere. Although Bitcoin has become a global phenomenon, it is still too dependent on any negative news in the world, so the new negative information about it from the SEC may turn into another collapse, similar to the one we saw in early September.
We believe that sooner or later, global regulators will still have to draw up clear rules for the operation of the digital currency niche, as the scale of the latter is becoming more and more. Perhaps we will face this already in 2021. Still, analysts are counting on serious niche growth at the end of the year, which traditionally can attract newcomers’ attention to the industry. This means that their protection will be more relevant than ever.