The US Senate bill to bring cryptocurrencies under control and protect the public is a major triumph for the industry and for all the players involved, mainly because it avoids the supervision of the Securities and Exchange Commission (SEC) and proposes to place them under the supervision of the Commodity Futures Trading Commission (CFTC), a much smaller agency with an attitude towards the subject that is infinitely less hostile than the SEC’s and its current director, Gary Gensler.
The regulatory aspect is important: applying the same rules to cryptocurrencies and cryptoassets as company shares is not sustainable, and could harm the United States’ potential to be a player in this market. The Senate bill doesn’t say the SEC is too old-fashioned or incapable of regulating these types of assets, but that they should be regulated in the same ways as currencies, commodities, derivatives or other financial products.
The simple fact is that cryptoassets are here to stay, and their value will depend largely on whether people see them as reliable. Does this mean that anything goes, and that the thousands of cryptocurrencies that exist today will survive into the future?
Not at all.
Because of the open and simple nature of Satoshi Nakamoto’s famous paper on bitcoin that took the blockchain out of a drawer and launched the cryptocurrency revolution, it is very easy to launch a cryptocurrency, so much so that some people have done so for a joke.
Bitcoin, whose issuance already exceeds 90% and which many investors, companies and even governments use as a store of value, will coexist for some time with an Ethereum whose creator had the brilliant idea of using its blockchain in an infinitely more versatile way, and with an infinite number of other currencies with no guarantee of survival. Alongside them are many other cryptoassets dedicated to all sorts of things, from reflecting ownership of something, to seeking market mechanisms to try to do things like incentivize the removal of carbon dioxide from the atmosphere, or creating other supposedly efficient markets where there were none before.
From an innovation perspective, this is all too dynamic to be equated with a mechanism like the SEC. We are moving from an “if I don’t like cryptocurrencies, I ban them” attitude, to more of a “this is here to stay, and if I take steps to chase it away, even temporarily, I risk damaging my economy” attitude.
An excess of conservatism in the control of cryptoassets is increasingly seen as making no sense, although this does not imply, of course, trying to protect the public from the many speculators and criminals trying to make a quick buck, or to protect the environment by reducing the amount of energy used in mining them or making sure it doesn’t come from sources it should come from.
If we have a more reliable and secure mechanism than the current one for the operation of a currency, and its value and relative importance only depends on the number of people who believe in it, opposing it makes no sense: the cat is out of the bag, and conspiracy theories about alleged pyramid scams are just that, conspiracy theories.
The blockchain is set to become a kind of quasi-universal technology that will be behind many, many things, and like other great technologies, it is set to change the way many others work. Some of these changes will please us, others will not, and others will seem crazy as they sweep aside old ways of doing things. In any event, we can’t say we weren’t warned.