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- 1 Circle CEO Jeremy Allaire explains the importance of crypto regulation.
- 2 Four different crypto bills are currently under process in the U.S.
Circle’s CEO Jeremy Allaire in a podcast episode of Fortune’s Leadership Next talked about the future of crypto regulation in the U.S. During the podcast, Allaire compared the crypto crash of 2022, which coincided with the crypto winter, with the dot-com bust of the 1990s. He shared his ideas on how crypto can be more than a speculative asset and Circle’s partnership with the U.N. to make USDC usable by Ukrainian refugees.
Could Proper Crypto Regulation Have Avoided Crypto Winter?
During the crypto crash of 2022, the prices took a node dive. The crypto industry witnessed events like the Terra Ecosystem collapse, Three Arrow Capital, FTX-Saga, and many more. All these events strengthened the requirement for comprehensive crypto regulation.
Nearly 2 Trillion dollars were wiped out in 2022 which could be considered the worst year for the industry. Almost every cryptocurrency and token registered their lowest prices. It also dwindled peoples’ trust in crypto. Circle’s CEO says it’s all a part of a cycle drawing similarities with the fall after the dot-com bubble exploded in the 1990s.
By cycle, he referred to every new technology or financial instrument’s different phases. First, there is great enthusiasm and buzz which invites huge capital and investments. This equation gives rise to unrealistic expectations, which when kept pushed or weren’t fulfilled, fall like a house of cards.
A similar scenario was there during the dot-com bubble phase and the companies standing need no introduction, and no one remembers the ones who were wiped away. There was tremendous enthusiasm and buzz surrounding crypto; investors poured in massive amounts but the technology failed to deliver, and everything collapsed.
How Crypto Regulations Can Save Us From Reiteration?
A close analysis of collapses brings forth a few commonalities. Users’ funds were mingled with the company’s funds and there was no authority to govern and police these crypto companies. No one considered the user’s protection and bad actors exploited these loopholes. The regulators in the United States seem to have learned the lesson and started regulatory action.
To avoid the recurrence of the FTX-like incident, the SEC’s regulatory action against the crypto industry surged by 183%. Many in the industry believe it felt like the regulator waged a war upon them. Also, the SEC needed to provide a proper, understandable regulatory framework for the crypto entities.
This created a bad image of the United States as being a bearish country on crypto. But the lawmakers are now working on four different bills that would change the crypto demography of the country. The four bills could solve the crypto regulation issue in the United States.
The Financial Innovation and Technology for the 21st Century Act (FITCA), the Responsible Financial Innovation Act (RFIA), the Digital Asset Market Structure Bill (DAMS), and the Digital Commodity Exchange Act (DCEA), if passed, could bring the regulatory clarity in the United States.
A strict regulatory framework is required for the crypto industry to thrive, innovations to continue, and users to benefit and not be harmed. Users will have someplace to solve grievances like they can go to the SEC to solve stock-related issues. Also, crypto regulation would benefit the companies. They would have a standard to follow and if all goes well, every party associated can be a winner.
Adarsh Singh is a true connoisseur of Defi and Blockchain technologies, who left his job at a “Big 4” multinational finance firm to pursue crypto and NFT trading full-time. He has a strong background in finance, with MBA from a prestigious B-school. He delves deep into these innovative fields, unraveling their intricacies. Uncovering hidden gems, be it coins, tokens or NFTs, is his expertise. NFTs drive deep interest for him, and his creative analysis of NFTs opens up engaging narratives. He strives to bring decentralized digital assets accessible to the masses.
