March 9, 2023

Crypto: Three Cheers for the Regulators?

The SEC and other regulators have taken a lot of heat for their approach to cryptocurrency regulation, with the SEC in particular being singled out by various crypto-evangelists for its allegedly unreasonably antagonistic approach to regulating digital assets & alleged reliance upon regulation by enforcement.

The crypto industry & its advocates complain that the SEC’s approach stifles innovation, but this FT Alphaville blog says that by being fuddy-duddies, the SEC & other regulators may have helped prevent the crypto meltdown from turning into a 2008-style financial crisis. The Financial Times doesn’t like it when people excerpt its stuff, so you’ll have to read the blog yourself – but it says that the burden isn’t on regulators to accommodate crypto, but on crypto advocates to prove their vaunted tech is more than just tulips & vaporware.

The blog lauds US regulators for their surprising effectiveness at curtailing crypto’s growth and preventing the ongoing crypto meltdown from spreading its contagion to the broader financial system – noting that even at the peak of crypto mania last year, the entire “value” of bitcoin was a mere drop in the bucket of the overall US capital markets.

John Jenkins