As a researcher who has spent the last four years navigating the tumultuous waters of the U.S. crypto industry, I can’t help but feel a sense of both relief and anticipation. Relief that we’ve weathered the storm and emerged stronger, and anticipation for what lies ahead in shaping the laws and policies that will govern this exciting new frontier.
Over the past four years, our efforts have primarily been centered around safeguarding the future of cryptocurrency within the U.S. Despite facing an unfriendly government and legal battles unlike any before, we have stood firm and emerged victorious.
Currently, the sector is grappling with a significant challenge: Influencing the laws and regulations that will guide its operations over the next few decades. A key point of contention in this struggle is the concept of “decentralization.
it fosters competition, encourages creativity, and promotes collaboration; all while safeguarding individual freedoms and maintaining both financial and social value.
However, what’s the rationale for legalizing decentralization? By implementing policies that encourage it, we can achieve three crucial results:
Let’s strive to prevent large, influential companies from major sectors like Technology, Finance, and Entertainment from solidifying their power in the growing blockchain market. History has shown that centralized control in internet, banking, and entertainment networks has resulted in consolidation and exploitation, disadvantaging the very users who rely on these services. It’s crucial for the next phase of the internet to prioritize the success of smaller players – those in Small Tech – as a wider array of options is essential for global progress.
2. Let’s make it so that founders and creators are incentivized to relinquish sole control and develop systems that resemble public infrastructures rather than proprietary technologies. The internet grew rapidly due to entrepreneurs being able to build upon common, open platforms such as email and the web. Blockchain technology opens up a comparable, yet even broader, realm of potential.
Ultimately, we can safeguard consumers as well as foster long-term investment and development by implementing minimum standards of decentralization. This approach will encourage digital assets to operate more like commodities rather than securities, thereby mitigating volatility, fraud, and the speculative nature of pump-and-dump schemes. Although this might negatively impact crypto hedge funds and day traders, it would be beneficial for those aiming to create valuable blockchain products.
If these three incentives are absent, the appeal of centralization proves overpowering for developers. Although blockchain technology has made decentralization more technically feasible and simpler to execute at a large scale, it remains far more convenient for developers to make unilateral decisions, rather than reach consensus; and it’s difficult to resist the temptation to amass profits among a few, instead of sharing them within a community.
So how do we incentivize decentralization?
A more suitable regulatory structure is needed for technologies like blockchains that are decentralized, one that doesn’t rely on central intermediaries as traditional securities laws do. This new framework could encourage decentralization by lessening regulatory obligations and offering broader market access to projects that distribute both ownership and control rights. Additionally, it should provide custom disclosures to ensure transparency.
This method isn’t entirely novel; it expands upon the SEC’s 2019 Digital Asset Framework, but it also resolves one of the main conundrums that framework initially presented. The framework aimed to minimize user risks by reducing dependence on centralized entities. However, it unintentionally encouraged projects to hide their ongoing development activities or even discontinue work entirely, thus potentially exposing users to substantial risks.
By shifting the perspective on decentralization towards power distribution and merging these control-based decentralization standards with transparency requirements, this fresh regulatory structure would enable innovators to construct decentralized technologies more effectively, allowing them to combat the appeal of centralization without exposing users to the risks that securities laws are intended to mitigate.
As a forward-thinking analyst, I believe this strategy can adapt readily to the changing landscape of our industry. This flexibility promotes innovation, propels the advancement of decentralized technology, and empowers the U.S. cryptocurrency ecosystem to flourish in the years ahead.
It’s inevitable that some within the industry may resist changes in favor of promoting their own interests, but we should remember the advantages of blockchain technology for everyone, not only cryptocurrency users.
If we win the battle for decentralization, we can defend the purpose of crypto.
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2024-12-17 18:03