The relationship between the government and new technologies has always been a rocky one. This has been especially true ever since the digital revolution started some decades ago, as it gave place to an unprecedented level of innovation. With the tech industry being all about disruption, it is not surprising that the government seems to be always trying to catch up. This warrants the question: What does this mean for crypto?
While the topic of crypto regulation has been constantly present over the past years, it is pressed even further every time investors face a bear market. More often than not, coverage of the topic will talk about the necessity for clearer regulation to prevent crashes and collapses like the one Terra experienced. The fact that a clear regulatory framework is needed for crypto to become safer and reach adoption, is undeniable. However… Who should design is not as clear.
Back in March, the Cryptocurrency ecosystem rejoiced when news came about President Biden signing an executive order that would see federal agencies cooperate to regulate cryptocurrency. The order, according to the administration, was designed to “lead and shape financial innovation to promote prosperity, prevent abuse, and advance democratic values”.
Unfortunately, the order itself is reflective of a major issue that has plagued the cryptocurrency space since 2008 by limiting crypto to the role of a financial tool. Blockchain technology, which is the backbone of crypto and other technologies like NFTs and Web3, is only referred to 4 times in the almost 5600 words long order. The only time the term was used in regards to regulation was to request the addressing of blockchain’s environmental impact.
The attempt to regulate cryptocurrencies without considering the larger role they play as part of complex digital ecosystems shouldn’t be surprising. Governments around the world have proven themselves to be unable to understand the technology and keep up with it. Examples of this include Senator Ted Stevens’s infamous “series of tubes” metaphor when referring to the Internet or questions asked by lawmakers during Mark Zuckerberg and Sundar Pichai’s Senate hearings.
With cryptocurrency being an essential part of blockchain technology, understanding the implications of regulations beyond the financial realm is essential. This is not only in the tech industry and consumers’ best interests but also in the government’s. As efforts to launch a CBDC and rein in big tech gain momentum, the government could find an important ally in blockchain with the development of Web3 and other decentralized technologies.
Nasdaq’s Global Markets Reporter Jill Malandrino and CFTC’s former Chairman J. Christopher Giancarlo sat with Linqto’s Chief Strategy Officer Karim Nurani to talk about “Government and Its Relationship to Crypto”. The panel, which took place during Grit Daily House at Consensus 2022, covered topics ranging from how crypto falls under a category of its own to the role a CBDC would play on the national economy.
If you missed the chance to attend Grit Daily House in person and want to hear what these panelists have to say about this topic, worry not. You will be able to watch the panel in the video below and find our other panels on Grit Daily’s official YouTube Channel.