Nicholas Weaver wrote a excellent paper about cryptocurrency issues and the need to regulate the space—with all the existing regulations. His conclusion:
Regulators, especially regulators in the United States, often fear accusations of stifling innovation. As such, the cryptocurrency space has grown over the past decade with very little regulatory oversight.
But fortunately for regulators, there is no real innovation to stifle. Cryptocurrencies cannot revolutionize payments or finance, as the basic nature of all cryptocurrencies makes them fundamentally unsuitable for revolutionizing our financial system, which, by the way, already has decades of successful experience with digital payments and electronic money. Supposedly “decentralized” and “trustless” cryptocurrency systems, both technically and socially, do not provide significant benefits to society, and in fact necessarily also fail in their fundamental claims of decentralization and lack of trust.
When regulating cryptocurrencies, the best starting point is history. Regulation of various tokens is best done through the existing securities law framework, an area in which the US has nearly a century of well-established laws. It begins with the regulation of the issuance of new cryptocurrency tokens and related securities. This should substantially reduce the number of fraudulent offers.
Similarly, actively regulating cryptocurrency exchanges should offer substantial benefits, including removing significant consumer risk, blocking key money laundering channels, and generally producing a much more regulated market. and much less manipulated.
Finally, stablecoins need basic regulation as money transmitters. Unless action is taken, they risk becoming substantial conduits for money laundering, but requiring them to treat all users as customers should prevent this risk from developing further.
Read all.
*** This is a syndicated blog from the Security Bloggers Network of Schneier on security written by bruce schneier. Read the original post at: https://www.schneier.com/blog/archives/2023/03/nick-weaver-on-regulating-cryptocurrency.html
