Is regulation inevitable?

Bitcoin and the cryptocurrencies They have been with us for over a decade. However, regulation has been a long time coming. This late response from regulators can be attributed to the slowness and natural clumsiness of the bureaucracy. For a long time, the crypto ecosystem was thought of as a small niche product. This has changed quite a bit in recent years. In fact, we can now say that crypto is no longer a niche. It is part of the “mainstream”. Of course, it is still a new and emerging market. The phenomenon as such has come as a big surprise.

The spectacular growth of this young industry is forcing regulators to catch up with regulation. Certainly many in this ecosystem prefer to maintain a system based on non-regulation. We must remember that in this space there is a lot of idiosyncratic actor. In fact, many aspire to create their own utopia on a kind of parallel planet. What is valid. However, you cannot eat the cake and at the same time keep the cake. This industry wants the financing of the traditional system. He wants the money from the traditional system. You want traditional system users. But you don’t want to stick to the rules of the traditional system.

During the last two bullish cycles, the arrival of lhe institutional demand has worked as the great motivator for many. In other words, you have to buy now. Because the price of Bitcoin is going to go up in the future due to institutional demand. So goes the story.

So, exchanges and crypto companies are willing to take capital from large institutions. However, what you want is to take that capital without many conditions. In other words, Bitcoin to the moon with the capital of the whole world. But no one has the right to demand certain minimum conditions. You can not establish some rules of the game. Because it is no man’s land. We have to give our money just like that, trusting in a free market in the style of the wild west, with our eyes closed. If the price falls by 70-80%, calm down and keep buying. If companies in the industry go bankrupt due to mismanagement, calm down and keep buying. They want to take money from the common man. But they do not want to follow the rules of the common man. Bitcoin, it seems, lives beyond good and evil. This approach is not sustainable. As simple as that.

They take other people’s money, but they don’t want controls saying they are obstacles to innovation and creativity. Later, they declare bankruptcy generating billions in losses for millions of people. And they still try to sell the idea of ​​the libertarian utopia. I fear that the regulators are not going to eat that tall tale.

Users who have lost their savings during this rough patch are not going to sit idly by. People tend to be very libertarian with themselves. But they are not so libertarian when the other runs over their rights. Those affected by the latest bankruptcies will surely seek the protection of Papa Estado. And it doesn’t take a genius to know that that will obviously put a lot of pressure on regulators to catch up with regulation.

This is not about agreeing or not with the regulation. It is not a matter of being for or against. In fact, there is little point in defending or refuting the virtues of free market fundamentalism in this context. In reality, it is simply a matter of rational expectations. The regulation will come as a government imposition due to public pressure. And you don’t have to have a crystal ball to anticipate this.

Now, if all of us bitcoiners settle in a distant galaxy and dedicate ourselves to building a libertarian utopia, with a closed and autonomous economy, totally independent from this planet, suddenly, we could avoid the regulatory tide. The great little detail is that many cryptocurrency exchanges have staff, offices, and users on this planet. And they take money from the people of this planet. Those users actively seek the protection of regulators in their jurisdiction. Then, It is not unreasonable to assume that these regulators will sooner or later come knocking on the door of these multi-billion dollar businesses demanding compliance with certain standards.. This is not an attempt to attack the doctrines of classical liberalism. Nor is it an argument in favor of state intervention. It’s just common sense. What you see coming, you see coming.

Of course there are some operations that are easier to regulate than others. Obviously, a hedge fund with offices in New York or an exchange with users everywhere is not the same as a small home mining operation. A pension managing the money of thousands of workers is not the same as an individual guarding their savings in a cold wallet. Of course, the regulation of such a market presents a great challenge. We cannot deny that.

In this case, fanaticism is counterproductive. Insisting forever on some kind of laissez-faire anarchist/capitalist project will not move the regulators. Most businesses in this industry have no choice but to comply with the laws of the land. Not everyone can afford to operate underground. The aspirations of living outside the law, I’m afraid, are not very realistic. At least, they are not realistic for everyone.

Regulation is inevitable. “No regulation” is unfortunately not an option. So, it doesn’t make much sense to debate around the false dilemma of “regulation” or “non-regulation”. It is best to open a debate around the type of regulation that offers the greatest possible amount of user protection without harming growth in an emerging industry.

When Bitcoin was nothing more than a small niche, it was much easier to think in absolutes. Fanaticism occurs naturally in small groups. However, Bitcoin and cryptocurrencies have grown a lot in recent years. This community is no longer a small band of libertarians and anarcho-capitalists with dreams of revolution. Today’s community is much broader and more plural. Bitcoin is already playing with the big boys. He is entering the big leagues. And whoever wants to be in the big leagues, he must conform to the rules of the big leagues.

Disclaimer: The information and/or opinions expressed in this article do not necessarily represent the views or editorial line of Cointelegraph. The information presented here should not be taken as financial advice or investment recommendation. All investment and commercial movement involve risks and it is the responsibility of each person to do their due research before making an investment decision.

It may interest you:

Investments in crypto assets are not regulated. They may not be suitable for retail investors and the entire amount invested may be lost. The services or products offered are not directed or accessible to investors in Spain.

Is regulation inevitable?