Recent events in the crypto space have the smell of victory, but only represent small battles in an ongoing war. “Dramatic” changes are on the way.
Those who oversee the traditional finance sector won’t just let Bitcoin (BTC) wander off into the sunset without a fight.
That’s the sentiment expressed by the World Economic Forum’s head of blockchain and digital assets, Sheila Warren, who said a “dramatic” round of regulation was about to befall Bitcoin and the wider cryptocurrency space. Warren told Bloomberg on Thursday:
“We’re going to see another round of pretty dramatic attempts at regulating this space. As there’s more and more activity in these spaces there’s more and more demand signal for regulators to get engaged and involved.”
Warren’s comments arrived a matter of hours after Coinbase became the first cryptocurrency exchange to list its shares on the Nasdaq. Combined with Bitcoin’s booming ascent over the past year to reach new heights of close to $65,000, industry observers hoped the correlation of the two would lend some newfound legitimacy to the cryptocurrency space, and perhaps cause regulators to relax their itchy trigger fingers.
That possibility could still emerge as a reality, especially if Securities and Exchange Commissioner Hester Peirce’s recommended approach to regulation is taken into consideration. Peirce recently suggested that crypto projects should have a three-year grace period to establish operations before having to register any resultant token as a security — assuming certain conditions are met.
Among other things, a blockchain network would have to prove itself to be sufficiently decentralized by the end of the three-year period in order to avoid further SEC scrutiny.
But Warren thinks the scrutiny is unavoidable and suggested it would only increase as Bitcoin’s price rises further. Warren said the flurry of activity sparked by the crypto boom and the Coinbase listing was only the start of the process, not the culmination.
“Some are seeing this as the peak, I think that is absolutely wrong,” said Warren.
The rhetoric stemming from government entities on the issue of cryptocurrency regulation tends to focus on consumer protection — a very real concern in an industry still prone to malicious hacks, shady scams and costly accidental bugs.
However, calls for regulation are also motivated by a natural desire by governments to control the issuance and flow of money within their borders. The free-wheeling, autonomous nature of cryptocurrency poses a serious threat to the pre-eminence of fiat systems. Most major economies are already engaged in the process of absorbing the impact of crypto through taxation and regulation, or are building central bank digital currencies to compete with, and, eventually, replace it.
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Author: Greg Thomson