Regulation: The Good, The Bad, & The Ugly
Part 1
The lurker in the shadows, government regulation, so far it's been inconsistently applied, ineffective, and problematic. Regulation threatens to completely transmogrify the Cryptoverse. The pace of change over the coming years in crypto will be dramatic and much comes down to various governments regulating the block-chain space. This space has no shortage of Libertarian minded individuals and die-hard maxis who'll shrug their shoulders at government regulation and exclaim in a matter-of-fact manner, "Crypto is unstoppable." While it is true that short of completely shutting down the internet, crypto in some form is "unstoppable," but for the space to truly thrive there needs to be a balance of smart innovative government oversite. Regulations are inevitable and it is incumbent for the users, developers, and companies in the Cryptoverse to shape the narrative. There is so much positive that web3 can bring to the world and this needs to be over emphasized. The narrative of cyberattacks, scammers, and people getting rekt are great click bait; while representing a small fraction of what is really happening in the space; it is amplified an order of magnitude through the lens of the no-coin media. Shaping the narrative is vital in the coming regulation saga.
Turkey, Korea, India, and China are but a few examples of the bad and ugly. These governments whom feel their agendas endangered by crypto-currencies and have concluded that they will "ban" crypto. Let us examine a few cases of what regulation could look like and its effects on the Cryptoverse. Understanding is paramount to shaping the narrative.
“Whatsoever therefore is consequent to a time of war, where every man is enemy to every man, the same consequent to the time wherein men live without other security than what their own strength and their own invention shall furnish them withal. In such condition there is no place for industry... no knowledge of the face of the earth; no account of time; no arts; no letters; no society; and which is worst of all, continual fear, and danger of violent death; and the life of man, solitary, poor, nasty, brutish, and short.”
― Thomas Hobbes
The Good
(This section will be short.)
Man left unchecked will muck about and make a mess of it all. Or so Hobbes in his Leviathan would have us believe. The tragedy of the commons is a very real concept which we are witnessing now in the unregulated spaces between nations. Pollution, overfishing, exploitation of vulnerable populations, all of these tragedies come about because of weak states, weak regulation and no defined international system that nations can agree upon. We are living in an unprecedented age, the post war order forged in the destruction of the 1940s is unravelling. (That however, is a topic for a whole other post.) The point is that there is a growing statist philosophy amongst the powerful countries around the world and less cooperation on an international level. This will lead to a disjointed and fragmented regulatory space. While at first this may appear to be great for crypto with projects able to exploit this disunity in the long run it maybe bad if regulation is not consistently applied.
The innovation and chaos of the Cryptoverse is indeed exciting, but chaos unbound will like the Titan Saturn devour its own children. Some regulation can be a good thing, restraining the predatory and exploitive nature of people. The picture below was one of the defining environmental moments in America where people realized there needed to be some sort of regulation of industry concerning pollution. The photograph is of the Cuyahoga River in Ohio on fire because it was so polluted. This eventually led to the clean water and air acts, which are beneficial. No one can thrive when the air is a leaden toxic soup and the water burns.
Without some oversite and consequences companies would still have no problem with externalizing their costs and dumping nasty chemicals where it is cheapest. There are many other examples where some government regulation is beneficial to the majority of society. When it comes to Crypto some simple rules and regulations can provide a stable foundation through which players compete on a fair and balance playing field. Please try not to laugh, I know it's a little starry eyed, but I still have hope that humanity will come to its senses.
What would this look like? Well, that is the debate and the narrative of which the crypto community needs to take control. Stable coins are definitely a hot topic and a potential destabilize force in the markets. Some basic auditing regulations instead of these shady irregular attestations would be something I believe everyone (with the exception of Tether) would come to a consensus upon. Of all the regulations that have been coming from the Korean government (discussed further in The Bad section) at least one makes sense to me. That regulation states that employees of exchanges cannot engage in trading. I believe that exchanges engaged in trading in their own markets is just simply ripe for corruption. While the companies may not actually be nefarious it has a bad appearance. Again, appearances and the narrative matters, if these companies want to appear legitimate then they shouldn't be front running their retail traders and exploiting their users for a monetary gain, aren't the effing fees enough!
I find myself digressing in this post and it's scope has expanded. I'll finish up in part two so if your still reading these words please check it out and thank you so much for spending your precious time reading my thoughts. I hope you have a splendid day.