This week, US President Joe Biden signed an executive order on so-called digital asset innovation. The order is directing a range of federal agencies to study the same industry and provide their reports to the regulatory authority. For many analysts, this is a huge milestone for the crypto and blockchain industry in the US. That also means that anyone who is bullish on crypto, in the long run, could see a big potential for cryptocurrencies to change and improve many aspects of the most basic services billions use around the world, not just in the United States.
In that case, this executive order is a much-welcomed gesture that will have numerous positive effects in the years to come. At the same time, the crypto industry also welcomed the same process and stated that it is open to dialogue when it comes to any unclear issue. All of this is dramatically shifting the narrative of the cryptocurrency domain. No longer is the issue of whether or not crypto will survive. With this order and the upcoming regulatory process, the issue is how can the US maintain its clear leadership role in this growing and ever-more important IT sector.
The process of establishing any industry demands some level of regulatory activity. Otherwise, there is a possibility that the same domain will create endless problems for all of its participants. That is why the US SEC is adamant about regulating financial services for both consumers and industrial and institutional entities. It is impossible to have an industry that is safe for some participants but not for others. All of them are active in the same ecosystem and a critical issue for one is a critical issue for all. The same applies identically to the cryptocurrency and blockchain industries. Here, many so far believed that there is an imperative that regulatory bodies completely avoid crypto however the same avoidance is possible.
Otherwise, the governments will gain a foothold in this emerging industry and with it, disturb or break down its basic supporting pillars. But, the same crypto maximalist concept goes only so far in the real world. Without regulation, there is no chance for the same domain to be safe and prosperous. Instead of that, the question becomes how and when will the collapse take place. In that case, while the basic element of any network, including bitcoin and its BTC token, do remain in place, its relevance drops down drastically. The same happens to its token value and market capitalization. Even crypto maximalists do not want the same outcome and that applies to 2022 as much as it did to 2012.
Fears of Centralization
Many of the fears that are related to the crypto regulation steam from the potential for cryptocurrency centralization. That comes as the polar opposite to the embedded decentralized features that are the bedrock for many early adopters of cryptocurrencies. A decade ago, the fact that bitcoin was completely insulated from any national or international regulatory or financial bodies was the reason why esports players, libertarians, and many similar small groups wholeheartedly embraced crypto. Today, the association that in some shape or form crypto might become centralized by regulatory oversight might sound terrible.
However, the truth is that no amount of regulatory insight or action can change or impact the core features of bitcoin or any other proof-of-work cryptocurrency. As long as there are mining rigs in the same network and they are connected to the internet, the network will function like it does today. The interim of any network is still completely insulated from any external impact. That means that the price of the fiat currency can go up and down, the market cap can rise and all, but the core remains secure no matter what the US or any other nation decides to do. That should provide a sense of ease to anyone who fears that any government could insert itself into the realm of crypto as an entity that can change or dictate the movement of the same networks.
Case of the Internet
The current process might feel unique in terms of the technology it covers – blockchain – but it is not an anomaly in the regulatory sense. In fact, a great example of the ongoing and upcoming regulatory oversight in crypto can be found 30 years ago. In the early 1990s, the technology of the internet and the world wide web. It also began taking the world and especially the US by storm starting with the late 1980s.
In 1991 and 1992, the internet was already used by millions and offered unprecedented potential when it comes not just to the possibilities for spending leisure time and gaining information, but also when it comes to a growing field of internet-based business. No matter how natural the same space might seem today, it too needed to be heavily regulated over a decade. The same regulatory oversight continues today as well.
It would be untrue to suggest that all of the scrutiny coming from the US agencies will not have some manner of impact on the present crypto community. The review and assessment that the SEC and other agencies will create will not determine that everything is insanely positive and perfect in the same industry. Instead, chances are that the process of actual legislative definitions of the crypto space will be long and arduous.
Some companies and even businesses that are completely decentralized will not survive the same journey, either directly because of the regulatory changes or because of a complex set of factors triggered by the same process. But, the end goal of the journey is still more than valid and in many ways completely necessary. Otherwise, the can is simply being kicked further down the road until it reaches a point of some type of implosion. With regulations in the US, the market can still go anyway it likes, but the business itself will be on a solid regulatory footing.