The founder and CEO of Hyperlinq, a fintech company focused on institutional-grade trading software service, Amar Gautam recently got in touch with BlockPublisher as he answered the question regarding the effects of crypto regulations on the space stating:
These congressional hearing will bring added attention to the industry. It will expedite regulatory framework and adoption for both retail and institutional users. In my opinion, blockchain regulations are very much required to keep a healthy business environment. These hearings are the first steps towards it. If the legislation continues to be missing, the US will lose many startups who are doing innovative work.
Facebook’s Libra has brought the attention of the lawmakers in the U.S. towards the broader crypto space, a blessing as claimed by many. Since cryptocurrency space is a technological innovation, the lack of a clear regulatory net has allowed for many illegal activities to seep into it due to which there is a negative connotation attached to it.
With crypto hearings in the hindsight, it is expected that things will eventually get better from a regulatory standpoint. But in order for innovation to thrive in cryptocurrency industry, the need is to implement “proper” regulation suited to the characteristics of crypto world instead of over-regulation.
Amid the current lack of regulatory clarity, the fate of many U.S. startups hangs in the balance. With regulatory clarity largely missing, many startups and crypto projects might also opt to move out of the U.S. Another reason for this can be the fear of over-regulation in the future which might halt the progress and innovation made up until that point.
Last month, the peer-to-peer payments technology company, Circle, decided to move the majority of its exchange operations offshore to the crypto-friendly island of Bermuda. The chief executive officer of Circle, Jeremy Allaire, also stated:
The lack of regulatory frameworks significantly limits what can be offered to individuals and businesses in the U.S.
If the lack of regulations and future uncertainty prevails in the U.S., Circle moving out of the country might set itself as a precedent for others to follow. The need is thus to implement regulations in this burgeoning space as soon as possible. But there is a downside to over-regulation as well. Startups might face difficulty in keeping their innovation rate the same under a tough regulatory net and thus can opt to move out of the country.
Adding on his statements, Amar also stated:
Like all other stores of value, when left unregulated, there are all kinds of unhealthy practices that take place. Overregulation is not the answer either, and we hope that the US will use a light touch and regulate this new frontier of wealth.
The cryptocurrency space is expected to play a huge role in the future of global finance. If companies start moving out of the US, it can become detrimental to the US economy as a whole. While the lack of regulation will invoke a fear of uncertainty, over-regulation will invoke the fear of difficulty of operation among various crypto projects in the US.
The need of the hour is to find a delicate balance. With lawmakers’ attention now finally shifting towards the crypto space as brought in by Libra, it remains to be seen how long does it take for lawmakers to develop a suitable regulatory net around it.