Crypto-related hearings starting with Libra have brought the attention of the lawmakers in the U.S. towards the broader cryptocurrency space. After Facebook’s blockchain lead explained the workflow of its crypto Libra to the lawmakers, United States Congress also called in a hearing specifically dedicated to cryptocurrency world that included major crypto personalities such as the Circle’s CEO, Jeremy Allaire.
Kyle Asman, the founding partner at BX3 Capital recently got in touch with BlockPublisher. Kyle is of the view that intense regulation with policy-making centered around companies like Facebook will likely lead to innovation getting slowed down as new incoming projects might find it hard to find their path through the regulatory net. And stated;
The downside is that members of Congress aren’t turning this into a crypto issue: they are turning it into an issue of controlling Facebook and slowing down the other large tech companies from becoming monopolies. The policies they are developing are set to impact big tech—not support the thousands of entrepreneurs who are trying to start businesses in the industry.
Although there is a strong need for regulation in the crypto space, the excessive clampdown on crypto companies might just hurt the innovation in it along with smaller businesses which are just springing up.
Kyle put in comparison both, the positive and negative waves being brought by Congressional hearings. Talking about the crypto beneficial aspect, he said:
The fact that cryptocurrency is being discussed in front of Congress is a huge step in the right direction for those of us who have worked so hard to make digital assets a legislative priority.
Scams and illegal activities have plagued the cryptocurrency world since the very beginning. Due to the lack of regulation, a generally negative image is currently established in the eyes of the public and institutions regarding the broader crypto world.
With incoming regulation, a more trustworthy ecosystem will get established around cryptocurrencies which will likely take its adoption to new levels. The conversations about cryptocurrency in the finance world are getting intense and it will only help mainstream this space. As Matt Hougan, the global head of research of the US-based cryptocurrency index fund provider Bitwise, stated:
Thanks to Facebook’s Libra and Congress, we have just fast-forwarded two or three years into crypto’s future, accelerating all the conversations, debates, and mainstream discussions into the present day.
It is apparent that the lawmakers sitting in the Congress aren’t comfortable with Facebook running a global currency network which is expected to affect billions. The social media giant already has a user base of more than 2.7 billion and currency launch in such a big ecosystem is going to have huge repercussions for the global financial system.
In the wrong hands, Facebook’s aim of helping the unbanked and the poor might just backfire. In order to make it secure, lawmakers are trying to cook up regulatory workflows that can ensure the protection of the users and stop activities like money laundering.
Intense regulatory restrictions on the official end, in turn, gives way to the argument that regulatory authorities are trying to control Facebook. The cryptocurrency world has professed the idea of decentralized control and trustlessness. Excessive control by a few parties undermines the “crypto code”. With increased clampdown, the incentives for entrepreneurs and innovators in this industry will also get decreased which can hurt the growth of the crypto world overall.
All in all, there is a need for a delicate balance. While regulations are necessary to eliminate negative usage of cryptocurrency, excessive regulation will likely prove to be hurtful for the innovation going on and will hurt the decentralization principle of the crypto world. A balance is required to be obtained and it will be interesting how things unfold for both Libra’s and the broader cryptocurrency space as things get heated up.