Plodding Mediocrity of Crypto Regulations

Full document pdf

Thanks to Peter Van Valkenburgh, Coinbase team, Marco Santori, Ryan Selkis, Preston Byrne, Bart Mallon and Marina Guledani for bringing cascade of resourceful information, without them, I probably wouldn’t be able to grasp the regulatory reality so insightfully.

Following is a long Public Service Announcement (PSA). Because many people participate in crypto economy, either through technological contribution, speculation, investing or else, I feel there is a need to shed a light on some issues that are not loud enough. Ideally crypto economy is built around the open-source and most of the information must leave private chat rooms and be available to the public. I am pretty sure the issues I will try to cover are much better analyzed by the relevant people in respecting fields, but because a) these issues look boring, b) are not popular “bull” views and c) are not commercial in nature they are deprived from the light. I consider them to be worth the awareness of the common public, to make public think about these issues and deliberate more. Unfortunately I’m not submitting solutions at this stage, but status quo in the field looks a little bit appalling to me.

Title of this PSA comes from Justice Cardozo’s quote. Throughout my research around financial market regulation and practices I’ve come across him multiple times and I will bring Justice Cardozo’s quotes at multiple instances here. I think that crypto regulations should take the path of “plodding mediocrity” and in some certain way they do have tendencies to lean towards it. There is bore and avoidance when it comes to crypto regulations, but because we are witnessing new approach in dealings of our wealth we must give regulations more care and thought, and not only people with backgrounds in law but somebody who came into this field to pay off his debt or next rent must have adequate understanding and knowledge of it - this is not hard.

I have to admit that status quo is not the optimal way to describe what I think I see, but I had to use it because a small surrender from this community to anything as challenging as the regulatory opinion at this stage is a really missed opportunity for the decentralized promise. Nothing is ever rainbow and Giancarlo is not the Godsend (but boy he’s good), I’m going to list few things that are not your generic ICO banter, but are regulatory in nature and from my perspective require us to be more craeful and to give us more thought rather than excitement. Almost everyone is asking easy questions, trying to avoid the hard ones and to satisfy their instant needs for the sake of stability, everyone is trying to pass their responsibility to the nearest entity and/or authority.

I’ll make a guess and say that my perspectives and point of views would be irrelevant to most of the people who are well-versed in the United States regulations, ones who have an opportunity to discuss e.g. Proposed Rule 82 FR 60335 in afterwork hours with peer crypto enthusiasts, but I would like to challenge them. Crypto is a global phenomenon, this is not a tool for me to send a message to a dog in the United States, this is a movement of the global wealth, the global capital fund raise, it requires one to know the possible risks of exposing oneself to various jurisdictions. I know, at least, that it made me want to pry and see the mechanics behind the most developed financial markets and those mechanics are usually legal texts enabling and regulating financial transactions of any kind. Because I have to observe non-native regulatory environment and apply it to a nascent field of decentralized infrastructure in my native jurisdiction, I of course tend to observe the most well developed and regulated one and that is - United States. And if an opinion of a non-U.S native is not counted towards developing robust crypto regulations than how are we going to deliver on the promise of global crypto economy of interconnectedness. I get excited from the thought of being able to easily participate in the U.S economy from ten thousand miles away, but if regulation stifle this excitement, then we just get another asset class that was taken advantage of in the form of speculation at its inception. I know my voice is not loud enough as of any of those whom I’ve mentioned in the beginning, but I think that crypto needs outside perspective for the inside workings that might have global influence on the industry overall.

If you zoom-out of your crypto agenda, if you remove all of its decentralized promises, new infrastructure promises, new built-in incentives and if you look at it as a tiny event on the course of evolution, it will look like a small dot where technological advancement has been overtaken by the greedy capital appropriation. Capitalization on this technology came too quickly and to see how many people gained from it really distorts some aspects of its promises. Eventually it will pop and I hope that fundamentals will keep it alive. It depends what pops first although, this technology or any other big market that might channel new wave of funds towards it again. Beware the noise is big and loud as crypto inherited flawed influence of the widespread social media feeds.

Disclosure (if this counts as one): I own some digital currencies and I am an analyst in a non-US, private investment firm. I am optimistic about the technology as any other twitter follower you’ve got, but I cannot help myself to question everything I read. I’m not paid to read and understand all U.S federal regulations and to think what can come next. Although I’m lucky enough to have luxury to delve into this subject enough to scratch the surface of it and to understand the principles, hope I’ll get paid for that later.


CryptoGiorgi Gurgenidze