US Regulators should balance [financial] legacy with [digital] disruption
Digital currencies seem to be dominating every aspect of the American market. From its abode in the dark corners of the Internet a decade ago to a time when Presidential candidates are being funded by cryptocurrencies, this asset class has evolved like no other. It is precisely this evolution that regulators were wary of; and now that it has come about, a new challenge awaits them.
For a long time, the United States has been the bastion of enterprisal capitalism, with the growth of its traditional financial market being the envy of the world. Now, Washington must contend with the rise of an asset class that is controlled by no single entity, except the people that dominate its network, cryptocurrencies.
How do regulators deal with these contrasting asset classes? On one hand, the capital markets, consolidated in Wall Street, can be controlled to some extent by regulators; on the other hand, rogue cryptocurrency markets based on blockchain technology cannot be leased. Hence, regulators must not act rashly by issuing a blanket regulation that could scuttle the growth of such innovative technology. Instead, they should aim to bring balance, according to Derek Schloss, Director at the Security Token Academy.
In an exclusive interview with AMBCrypto, Schloss stated that the US should adopt a measured approach to regulation, one where they identify “how best to participate” and then, do so with an aim of maintaining a balance between the traditional and the disruptive. He stated,
“Regulators are in the difficult position of protecting our legacy financial markets while not suffocating disruptive technology before that technology has a chance to really get started.”
While blockchain technology has been largely embraced by countries the world over, with the tech being used in healthcare and voting systems, digital currencies, especially those that are “decentralized,” have faced the axe.
China has resumed a harsh crypto-crackdown and is now paving the way for a state-backed cryptocurrency. Russia is on the verge of seizing vast amounts of crypto from its populace, while India has a draft bill recommending a 10-year jail sentence to those involved in cryptocurrency-related activities. Other Asian countries like Japan, South Korea, and Singapore are far less individually-restrictive, but their domestic regulators are keeping a close eye on crypto-companies.
Schloss added that the rest of the world is “moving quickly” in creating “guidelines for a new digital asset economy,” but because the United States has a head-start in the traditional financial world, they should keep up the momentum into the digital world. He concluded,
“As it relates to our legacy financial markets, the U.S. does have a significant lead on the rest of the world. In order to keep its established lead, the U.S. must eventually ramp up its legislative and regulatory efforts, and create thoughtful guidance that our markets can rely upon.”