Bipartisan politics may be a good thing – as there’s more efforts to regulate crypto within the US. However, US regulators should remain in close talks with the industry in order to stick to what crypto really stands for.
While the US midterm elections are over, regulating forces are still keeping crypto under a close watch. 2022 marked a year where governments are drawing closer attention to the crypto industry, as many companies failed, and may have brought upon market disaster – all due to the lack of regulatory oversight.
While major federal players such as the US Securities and Exchange Commission (US SEC) are pushing for what they seem may be a good idea for regulating crypto, many crypto advocates have argued that they aren’t really acting within best intentions or practices.
This then brings us to the question: how should government representatives approach drafting and legislating crypto policy?
A good starting point may as well be creating more efforts to educate the wider public about crypto, and build upon advocacy to create stronger policies.
While a lot of US politics is preceded on two sides battling opposing opinions out, such a divide can bring better additions and development to the crypto economy.
It’s also worth noting that most of the crypto regulatory bills that are under consideration are bipartisan efforts. The Lummis-Gillibrand bill, and the stablecoin legislation, part of the main conversation of US crypto regulation, were created by both Republican and Democrat representatives.
Although much of these regulatory efforts are still not quite sound, seeing how these opposing forces are working together can possibly bring a holistic approach towards regulation, as different political parties have different objectives.
However, it should go without unnoticed that moving forward with creating new legislation to regulate crypto should be crafted carefully with recent crypto history in mind.
In addition to thinking about how to tackle money laundering, terrorism financing through crypto, and what kind of financial product to tax crypto under as, legislators should also consider the dangers of centralisation – most recently with FTX International.
To put it simply, FTX International failed due to human error from the lack of governance, accounting standards, and basic morality. FTX’s failures shouldn’t reflect crypto, its development, and the technology underlying it — and new laws shouldn’t be crafted this way.
When news on FTX came to light, many legislators rushed to think about how to criminally punish bad actors within the industry, working on further taxing efforts, putting bills that haven’t received much review from the crypto industry into legislation. At the same time, existing fiat centralized players continued to work their own magic, offering their own crypto products while demonizing FTX, Terra, and Celcius – often with legislators following the same opinion as well.
This game of pointing fingers is wholly pointless. More investigation should be put into why FTX, Terra, and Celcius have failed, and how to prevent this at the legislative level – starting with tackling how centralized organizations can abuse power.
That being said, when considering the creation of new laws to create a safer way in using and engaging with crypto, legislators should go beyond bipartisan efforts to create bills: they should adopt a more holistic approach in creating them by engaging with the crypto industry and implementing its core tenets: privacy, decentralization, and financial freedom.