With new regulations for crypto currencies in the US, crypto expert Devin Schur looks ahead. Will this also come to Europe, and what will be the impact on crypto?
March 1, 2023
Founder Token Partners
Young entrepreneur Devin Schoor (24) is one of the top bloggers Businessman. with him Token Partners He offers courses to private, professional and institutional investors on all relevant topics related to the implementation of blockchain in the financial system. Schoor studied management and organizational science at the VU and worked at Circle Partners, a management office for investment funds.
Crypto and law are always at odds. Crypto is designed so that power rests with the users, not with a central party like a government or bank. While the nature of crypto contradicts this, the law is intended to regulate and impose restrictions.
Regulating crypto is like trying to hold a fistful of air. Because of its decentralized nature, crypto, like wind, is elusive and difficult to control. The more you try to intervene, the more it slips through your fingers.
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Good law is needed
However, the law is certainly possible. While it may seem like the crypto industry isn’t waiting for legislation, the opposite is true. Market leaders have been calling for some time ‘Good Law’.
I am deliberately saying good law here because it promotes a healthy environment for innovation. Additionally, it ensures consumer protection, trust and legality. An example of good law: the obligation of crypto exchanges to disclose their financial position. ‘Bad Law’ On the other hand, innovation can discourage investors.
With a straight leg in it
Lawmakers have long taken a wait-and-see approach to crypto, but there’s been a noticeable trend in recent weeks, where they seem to be moving in with a straight leg. In particular, the Securities and Exchange Commission (SEC), the regulator in the United States, has established various enforcement actions. These actions are referred to colloquially as: Operation Choke Point 2.0 Named.
These actions are seen as a concerted effort to crush crypto as an industry. Instead of implementing regulations that create clarity, the path of ‘regulation through enforcement’ is chosen. Banned and fined. Not a friendly approach if you ask me.
Instead, I believe lawmakers should work with all stakeholders to create new legislation that recognizes the innovative nature of cryptos. After all, the crypto industry is always ready to think together.
The latest move by the US regulator is to sue crypto exchange Kraken for illegally offering investment contracts. It indicates “strike”. When you “stake”, you are actually contributing to the operation of the blockchain and getting paid for it. This is essential for the crypto ecosystem. Classifying stocks as an investment contract is like comparing apples and oranges. When you contribute to the functioning of the blockchain, it is not a typical investment contract. Banning strikes could have far-reaching consequences, but unfortunately this seems to be the beginning of many more actions to follow. Regulators have said that further action will be taken.
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The irony of this story becomes very clear when the facts are put straight. The main objective of the regulator is to protect investors. Especially when the US regulatory agency neglected its mission when investors needed it. FTX’s biggest scam in crypto happened right under their noses and went unnoticed. In fact, the regulator had close ties to FTX. I believe that banning strikes does not protect investors, and in fact, they are missing out on opportunities.
This approach by regulators can have disastrous consequences. For those who think Europeans are getting away with dancing, don’t cheer loudly. Europe seems likely to follow suit, as does the US.
At this point, I return to the equation that regulating crypto is as elusive as air. Crypto works on a decentralized and international basis. Any attempt to regulate crypto can easily be circumvented by users who can move their digital assets around. The moment a country adopts stricter laws like strikes, it can move the local crypto industry to countries with a more favorable climate.
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If the US continues this approach, it will lead to a loss of talent, capital and innovation. This can limit the growth of the wider economy and have negative consequences for the prosperity of its citizens. Current target Abu Dhabi $2 billion crypto fund To support crypto innovations. Hong Kong is about to legalize crypto again and friendly and financially attractive crypto legislation is being implemented in Dubai and Japan. If regulators in the U.S. continue on their current path, the country is likely to continue to be the center of technological innovation.
Now it is not in the government’s interest to grow crypto. Cryptos are decentralized and challenge the authority of governments and central banks. However, I believe that the government has a mandate to act in the interests of its citizens. It is therefore important for European legislators to find the right balance between protecting consumers on the one hand and encouraging innovation on the other.
Europe must not make the same mistake as America.
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