#加密监管 Is it good or bad?

Arbitrary Crypto Regulation Is About to Change

According to Jonathan Reichental, regulators have been slow to act on cryptocurrencies and they often miss the target. Hopefully, their approach will evolve in the coming years.

The World Wide Web, as the name implies, is borderless, and so is crypto. The common ethos of the Internet and cryptocurrencies is open communication and exchange, unhindered by national borders. On the ground, however, as cryptocurrencies have become more prominent players in the financial system, countries have begun to consider questions of sovereignty and regulation. While many countries have so far remained open to cryptocurrencies, others have restricted their use or banned them altogether. The same reasons that some have advocated for cryptocurrencies and blockchain technology — as a means to revolutionize the international financial system — have also alarmed many world leaders.

For example, Hillary Clinton, calling attention to the risks of cryptocurrency and the need for regulation at the 2021 Bloomberg Conference in Singapore, said, “Another area where I hope nation states start to pay more attention is the rise of cryptocurrency, because [it] has the potential to undermine currencies, undermine the role of the dollar as a reserve currency, and undermine the stability of nations, maybe starting with small nations but on a much larger scale.” These are strong words, and governments are beginning to take them seriously. Despite the decentralized nature of cryptocurrency, regulation seems inevitable and could profoundly alter its development and adoption around the world.

Regulatory environment

Generally speaking, financial regulations oversee the financial world, setting limits, requirements and guidelines for its institutions with the goal of keeping the financial system stable and establishing and maintaining its integrity. For traditional financial institutions around the world, these rules have evolved over decades. The cryptocurrency market, as a relatively new financial sector, does not have such a long history, and given its rapid growth and maturity, it now faces the prospect of regulation.

As the crypto market has grown, governments and international organizations such as the International Monetary Fund have noted its potential to disrupt established economic systems—both in a forward-looking, technological sense and in the more thorny sense of creating problems, such as those associated with the collapse of cryptocurrency exchange FTX in November 2022. In other words, the industry is now widespread enough that financial analysts worry that it could have adverse macroeconomic effects if not properly regulated, even as it has potential positive effects as well. The increase in risk has led to calls for more regulation. For example, the World Economic Forum has said with regard to cryptocurrency regulation that, like other financial regulation, its purpose is to "support financial stability, transparency, consumer and investor protection, and a level playing field for different market participants."

So far, most regulatory activity in the space has been conducted at the national level. But the use of cryptocurrencies is not confined or intended to be confined to national borders, making international regulatory cooperation an ideal — but one whose realization seems far away. But regulators have reason to pursue it: at the time of writing, one in five Americans claim to have participated in cryptocurrency trading to some extent. In Singapore, those numbers are even higher. As the market grows, everyone is eager to avoid a repeat of the 2008 financial crisis. Generally speaking, the larger the market, the easier it is to regulate; this is based on the assumption that as a market grows, it is more likely to affect the common good.

On the other hand, crypto advocates point out that crypto itself may be trying to essentially avoid a 2008-style crash. It constitutes an alternative financial structure that is not dominated by major financial institutions and is more urgently in need of regulation. There is a clear tension between the potential independent spirit of cryptocurrency and the nature of regulation. Is it a creative tension or a destructive tension? It may be too early to speculate, but in any case, governments have begun to assert their authority.

Regulating Cryptocurrency in the United States

The history of cryptocurrency regulation in the United States reflects the situation in most Western countries. Early on, the US government’s view was that Bitcoin

Bitcoin and other cryptocurrencies are fascinating innovations that require little attention from federal agencies. The frictionless system may excite early adopters, but more skeptics believe crypto is doomed to fail.

Yet, to the surprise of many, cryptocurrencies have not only not disappeared, but have continued to grow in value and popularity. Despite this, regulators such as the SEC, whose function it is to police the market and protect investors, have remained on the sidelines for some time. Eventually, the crypto markets became too prominent to ignore: problems with initial coin offerings prompted their regulation in 2017. Additional regulation seems inevitable, for example, after the collapse of Sam Bankman-Fried's FTX in November 2022. , became a question of which regulations would be implemented and what areas they would address.

The government's concerns actually focus first on fraud and the use of cryptocurrencies to conduct illegal activities on the dark web, but existing laws cover such cases. Until Congress passes additional laws directly related to cryptocurrencies, the SEC's approach will continue to be what is called "enforcement regulation" of existing regulations. Current regulations include anti-money laundering and terrorist financing provisions - these may apply to crypto-related cases, but they are not regulations written for crypto.

The future of crypto regulation

What’s clear is that the crypto regulatory environment is turbulent. There are so many different approaches that change so frequently — sometimes 180 degrees — that it’s hard to determine where a single government’s stance is from year to year, or even month to month.

Predictions are always risky, especially in a volatile situation like the one cryptocurrencies find themselves in. It is foreseeable that calls for regulatory clarity and cross-border consistency will grow, and the likelihood that governments will be able to respond to such calls in a timely manner is remote.

The lack of clear direction could discourage some cryptocurrency trading in the short and medium term for those who find such transactions too risky. But it is almost certain that cryptocurrencies and other digital currencies, and the blockchain technology that underpins them, will continue to be a force that governments must consider.

Crypto, and by extension blockchain, is part of a larger technology-driven global movement known as the Fourth Industrial Revolution. In this revolution, the world is undergoing a digital transformation, and as every aspect of our lives moves from analog to digital, digital currencies only make sense. How important is the digitization of money and its underlying distributed ledger in this revolution? Klaus Schwab, founder of the World Economic Forum — best known for its annual meeting in Davos, Switzerland — once said, “Blockchain is at the heart of the Fourth Industrial Revolution.”

Just as concerns about the possible impact of artificial intelligence and genetic engineering were managed through a degree of regulation rather than halting those advances entirely, state concerns about the potentially destabilizing effects of cryptocurrencies are unlikely to prevent their growing use. If applied properly, regulation could bring some desirable order to the often chaotic proliferation of cryptocurrencies, but finding the right approach to regulating this emerging phenomenon is proving challenging.