Decentralized Crypto Regulation Can Help Unlock New Innovations
Regulation and enforcement actions have been generating headlines in the blockchain and cryptoasset space, and there has been significant debate over the causes and implications of these actions. Comprehensive as these conversations might be, collectively they overlook a pressing question that seems worthy of further consideration; does every aspect crypto need to be regulated at the federal level? This is not to say federal agencies should abdicate all responsibility for such matters, as much as some libertarian-crypto advocates would enjoy such an approach.
getty
To create and sustain liquid and transparent capital markets for cryptoassets of all kinds, and to encourage said capital market structures to remain located in the United States, federal regulators need to play a significant role in this process. Recent comments by CFTC Commissioner Caroline Pham, advocating for a federal level sandbox, should be viewed as movement in the right direction.
That said there is an opportunity for the United States, especially on a state-by-state basis, to advance new ways of creating, developing, and sustaining blockchain and cryptoasset platforms, products, and services. There is even precedent for a decentralized approach to products and services, such as various aspects of insurance, electrical production and distribution, water and waste water management, and multiple others. While the wheels of federal policymaking continue to grind along, albeit slowly and with controversy around certain actions, states can take advantage of this gap.
Fail Fast And Iterate
It is no secret that the cryptoasset sector is not only a fast-moving space, but an asset class that has experienced quite a bit of volatility since it achieved mainstream awareness and understanding. Contrasted against that, the bureaucracy of federal policy making and regulation simply cannot keep pace with the rapid speed of innovation and new products and services in the sector. While not the only cause, or even a leading cause of unethical activity, this persistent lack of federal level policy making helps create an environment where uncertainty reigns.
At the state level, and fully acknowledging that states operate with different priorities and at different rates of speed, there is more potential to allow firms to create, experiment, and potentially even fail in a much faster manner. As competition continues to grow in terms of both cryptoassets and firms not located in the U.S., and jurisdictions actively seeking to market themselves, it looks increasingly up to the states to take the lead in flexible and entrepreneurially-friendly policy.
Create New Economic Hubs
Although over the last several decades much has been written about the importance of attracting a critical mass of knowledge workers and employers, the pace at which new hubs and areas of excellence have been created has seemingly stymied. Whether it takes the form of lower socio-economic mobility for American taxpayers when contrasted with previous eras or some other metric, the reality is that economic, political, and cultural influence continues to be concentrated in a small number of metro areas. Blockchain and cryptoassets, decentralized by nature
