Crypto regulation is the hot topic of 2022. The fear of a global cryptocurrency ban seems to have almost wholly subsided as adoption takes us past the point of no return. Banning crypto now is practically impossible. Yet, the lack of an upcoming blanket crypto ban does not mean that there will be no changes.

Most, if not all, crypto projects either fall outside current regulatory frameworks or are subjected to incompatible policies meant for existing financial assets such as traditional securities.

Is regulation even possible?

Unlike fiat investments, there are no protections for individuals investing in crypto. For example, if a bank goes bust in the U.K. and you lose your money, the FSCS will pay you £85,000 per firm. In the U.S., the FDIC the standard deposit insurance is $250,000 per depositor, per bank. The European equivalent, EDIS, pays up to €100 000. Given today’s world of social engineering, it seems sensible that we should accept some regulations to allow governments to issue protection for investors.

However, there is a real question about whether we need such help from governments. Perhaps it should be up to the crypto community to create these systems?

Projects such as Nexus Mutual offer cover for contract bugs, economic attacks, including oracle failures and governance attacks for around 2.6% per year. Do we need traditional solutions for disruptive technologies? Further, is it even possible for governments to create fundamental, impactful regulations for crypto? It seems like smart contracts are born for this, and a cross-chain global crypto DAO would be my preference over traditional governments where most politicians don’t even understand what blockchain means. I’d like to see a cross-chain DAO, somehow secured by a trustless voting system, issued to the world’s validators of the top crypto projects.

I have no idea how this would work in a way that wasn’t susceptible to exploitation, but there must be a possible world where we can achieve this. In this world, the crypto community could vote through the blockchain to ensure safe practices and deposit insurance.

If one chain got hacked, the DAO could payout from its cross-chain treasury to repay investors. Perhaps it’s a dumb idea. Message me on Twitter if you think it is, and tell me why. I’d love to explore the alternatives to government regulation with you.

Regulation & globalization

It is unlikely that the crypto community will be able, or allowed, to regulate itself any time soon. Therefore the need for some form of government regulation is inevitable. When new technologies are allowed to grow exponentially without formal regulation, we can have potentially socially devastating consequences. However, this is not just a new technology; this is a unique global monetary system.

Whoever controls the regulation potentially controls the future financial system as a whole. Credit Suisse claims that we are witnessing the birth of a “new world monetary order.” They posit that a digital renminbi will be much stronger in the coming months due to the current world economic crisis.

Crypto is not going away, and it shows the potential to replace the current system. This creates a new battleground. Controlling crypto regulation may be the only way centralized governments can retain their grip on the global economy. Globalization has three facets, economic, political, and cultural. I doubt that few would advocate for there to be only one culture and one political system for the entire planet. Why then are we settled on a single economic system?

Economic globalization has made trade more accessible, services more efficient, and outsourcing more practical. However, the agendas of the U.S., E.U., and China control most of the system. Crypto will allow all the benefits of economic globalization without centralized control. No one likes losing control, especially not global superpowers.

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