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- 1 The Web3 landscape is expanding due to its vast potential, causing regulatory authorities to impose laws that are proving to be counter-productive.
- 2 The US Federal Communications Commission wants to classify cryptocurrencies as securities, which will have adverse effects on industries.
The emergence of Web3 and the widespread adoption of cryptocurrencies have brought about significant advancements and potential disruptions to various industries.
As this modern technology, based on a decentralized ledger, continues to evolve, its increased traction within the public domain is causing the governments to frame writs. The implications are far-reaching, with now even the Federal Communications Commission (FCC) trying to crackdown on cryptocurrencies and classify them as securities.
Complications with Imposing Regulations on Web3
Web3 is the third iteration of the internet, focusing on democratization of data, decentralization of the ownership, peer-to-peer transactions and increased user control. Interestingly, it enables both functionalities at the same time— privacy as well as transparency!
At its core, Web3 leverages blockchain technology to enable secure, private, transparent, provenant and immutable transactions without intermediaries. Hence, Web3 has the potential to revolutionize multiple industries such as finance, supply chain management, healthcare, and more.
Governments worldwide have grappled with how to approach and regulate this new web advancement. Some governments have embraced blockchain and cryptocurrencies, recognizing their potential for innovation and economic growth. Others have expressed concerns about security, illicit activities, and complexity in monetary policy implementations.
Governments that embrace Web3 and establish clear regulatory frameworks are able to foster innovation. They attract investment and allow for the development of an environment to unlock the potential of blockchain technology.
By providing legal certainty, governments encourage responsible development, protect consumers, and ensure compliance with the existing laws. They can also have systems in place for Anti-Money Laundering measures.
The authorities must understand the infeasibility of traditional regulatory frameworks, designed for centralized systems, to decentralized ones. This creates uncertainties, complexities, hampers innovation, and hinders the growth of Web3 applications that can solve the problems which Web2 apps can’t.
The complexity of regulating a borderless and decentralized ecosystem across jurisdictional borders is something that cannot be justifiably tackled by a single legislation. Enforcement of these regulations and the preservation of individual rights will cause injustices because, in the context of Web3, they apply differently to different individuals.
FCC’s Stance On Cryptocurrencies
The FCC’s recent attempts to treat cryptocurrencies as securities have sparked debates within the blockchain community. Pro-crypto people argue that such regulatory decisions overstep the FCC’s legitimate domain of control.
Their point is reasonable because cryptocurrencies operate on decentralized networks; there is no centralized owner or a common enterprise running the asset. Hence, they must not be subjected to the same regulations as traditional securities.
Another factor is that categorizing cryptocurrencies as securities creates serious roadblocks for innovation in the industry. It also discourages organizations to explore the vast potential that the technology has to offer.
Treating cryptocurrencies as securities will lead to burdensome regulatory requirements, stifling accessibility for everyday users, and the ultimate goal of adopting them as a currency. This also causes serious problems for smaller blockchain projects.
The legal uncertainties will discourage investments and strategic partnerships. Striking a balance between investor protection and fostering innovation is crucial to realizing the full potential of Web3 and blockchain technology.
Striking the Balance
The FCC’s attempt to treat cryptocurrencies as securities raises concerns within the blockchain community, as it does not sit well with the decentralized nature of Web3.
Addressing the regulatory challenges of Web3 requires collaboration between government agencies, industry stakeholders, developers, innovators and users. The key focus should be to establish the perfect balance between regulations that protect consumers, and encouraging innovation and growth.
Web3 and cryptocurrencies have the potential to reshape industries and empower individuals for good. The Web3 landscape itself is constantly evolving, which means that we may not even have fully conceptualized all the possibilities. Collaboration and informed decision-making are crucial to harnessing the benefits of this revolutionary technology in a way that also has efficient solutions in place for the future risks.
Who is Samuel Ronan?
Samuel Ronan is a distinguished personality in American politics, who was in the race for US primaries, for 2024’s Republican presidential candidate. He served in the US Air Force from 2009-2015. But the 2013 federal government shutdown left him disillusioned by the government’s indifference towards the people, causing him to quit active duty.
He then went on to run for State Representative in 2016 with the Democratic party. Then he ran for the Democratic National Committee (DNC) Chair in 2017. In 2018, he ran for Congress as a GOP (Republican) candidate. He has also been heavily involved in the tech industry. His manifesto includes— support for Web3 and decentralized technologies and vision for modernizing America’s economy.
Disclaimer
The views and opinions stated by the author, or any people named in this article, are for informational purposes only, and they do not establish financial, investment, or other advice. Investing in or trading crypto or stock comes with a risk of financial loss.
Saurav Bhattacharjee is in charge of the Broadcast development team of The Coin Republic.
He has been covering the Metaverse and NFT niche for the past 2 years.
With stellar interviews on his portfolio like Nicehash, Paxful, WallstreetWolvesNFT, Bitholla, Totemfi, EOS.io etc. Saurav has spearheaded the NFT SUPERSTARS AWARD and successfully hosted the first award in 2021.
