Business & Finance

Strict Regulations for Crypto Market Hinder Innovation

The newborn internet was a free, unregulated market.

You have no sovereignty where we gather. Declaration of the Independence of Cyberspace

Soon after its birth, the internet claimed that governments have no right to set foot on this territory but that ideology was crushed later in the years.

Petal Walker, Special Counsel at WilmerHale, is of the opinion that strict regulations on non established networks that are trying to establish themselves, may be dangerous to innovation. She expressed her views during a Bipartisan Policy Center panel held on Feb. 12 and said;

‘If you are not an established network and you’re trying to create one then you have to deal with whether or not your security under the SEC jurisdiction [..] I do think there’s a danger that this paradigm is preventing potentially powerfully innovative methods of engaging in ecosystems from coming to fruition because the business cannot just start with the network.’

WilmerHale is an American law firm headquartered in Washington, D.C., that provides global legal representation across a range of industry and practice areas. Wilmerhale has a dedicated team to advise intermediaries and trading platforms on financial technologies and cryptocurrency matters.

The discussion was dedicated to the ongoing efforts to promote coordination, harmonization and efficiency among CFTC and SEC, while reducing regulatory overlap and duplication. Commodity and Futures Trading Commission (CFTC) and Securities and Exchange Commission (SEC), both have standings to prosecute individuals or companies for fraud in connection with sales of virtual/digital currencies. This authority is not exclusive for CFTC or SEC. Regulators like the Department of Justice and FinCEN wield the same authority.

For non established networks like cryptocurrencies, this hits home because regulation is one of the main factors that inhibit domestic adoption of the technology. If regulation demands are seen to the end, thousands of economic streams could be built around bitcoin and other virtual currencies.

On the topic of harmonization between the two Federal organizations, Petal Walker expressed that both these agencies should work together to provide developing networks with an ample ground to innovate. She said;

‘One area of harmonization that’s not only useful in terms of the market but for our nation to advance, is to be able to create a pathway for viable non scam entities that are attempting to get from pre-network to post-network to have a pathway that can actually work, because the danger is that other countries will advance beyond us if our very regulation prevents us from allowing our citizens who have great ideas to be able to bring those to fruition.’

Scam entities have made it difficult for true innovations like blockchain in general and cryptocurrencies in specific to create a space for themselves and continues to do so. Phishing sites have made a lot of cash off new entrees to crypto world and are damaging the repute of the technology day by day. She also warned the panel as well as the public that strict regulatory procedures by the agencies incharge could become the reason for their country’s lag in the race of technology.

Hester Peirce a.k.a Crypto Mom, Commissioner Securities and Exchange Commission, was also present on the discussion panel and bashed SEC for the current state regulation of the crypto industry. She said;

‘Judging the underlying Bitcoin markets and saying oh we don’t think that these are regulated enough well you know there are lots of markets that aren’t regulated but we nevertheless build products on top of them and so I think we have to be very careful with that kind of reasoning.’

All markets are either under the control of government bodies or industry organizations. There is no pure unregulated market in existence as is the case with internet now.

You have no sovereignty where we gather. Declaration of the Independence of Cyberspace

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Sarim Mehmood

An electrical engineer to be. Sarim is a blockchain & crypto enthusiast and an early investor in ETH and Ethereum based projects. Contact the editor at editor.opinions@blockpublisher.com

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