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Let's Not Over-Regulate Cryptocurrencies into a Chinese Monopoly
Like most people, the mysterious world of digital currencies remains for the most part…well, a bit of a mystery.
I’ve occasionally dived into some readings on cryptocurrencies - and found the water to be a little chilly. I do get the basic gist. And I certainly understand the desire to end run governments - with their very greedy hands and very nosy noses.
I ask you now to contemplate…government contemplating cryptocurrencies.
Facebook kingpin Mark Zuckerberg recently appeared before the United States Senate. The Senators’ questions for him about his website were…fairly basic. Rudimentary.
Ok - a bunch of Senators sounded REALLY goofy and uninformed. About a Web platform that has been around for nearly two decades - operating a business model VERY common to the Internet.
Can you imagine these government officials - ANY government officials - attempting to grapple with digital money?
Enter The Securities and Exchange Commission (SEC). This from February:
“(SEC) chairman Jay Clayton…will say: ‘As [Commodity Futures Trading Commission] Chairman [J. Christopher] Giancarlo and I stated recently, we are open to exploring with Congress, as well as with our federal and state colleagues, whether increased federal regulation of cryptocurrency trading platforms is necessary or appropriate. We also are supportive of regulatory and policy efforts to bring clarity and fairness to this space.’
“Cryptocurrency exchanges are currently regulated as money-transmission services….”
That sounds right. Cryptocurrencies are money-transmission services - and government should treat them as such. This is a comparatively light-touch approach - that leaves in place the freedoms that make cryptocurrencies attractive.
The government that regulates best - regulates least. The government that knows very little - should regulate even less.
But what far too often happens in government is - new round things are jammed into old regulatory square holes.
Government can’t keep pace with a deceased Galapagos Tortoise. So their regulatory holes are almost always too old for the old things for which they were created. And they are hopelessly awful for anything invented since…the cotton gin.
And what far too often happens in government is - regulators want to regulate. And regulate again. And regulate some more. Too much - is never enough.
So this - from just a month later, in March - would be a problem:
“The U.S. Securities and Exchange Commission is looking to apply securities laws to everything from cryptocurrency exchanges to digital asset storage companies known as wallets.”
This is government jamming digital currencies into the wrong regulatory hole. And this regulatory heavy-handedness will eviscerate the freedoms that make cryptocurrencies attractive.
We have very recently seen this debate - about how to regulate a nascent industry.
A quarter century ago, the World Wide Web was just beginning. The Republican Congress and the Democrat Bill Clinton Administration had a choice between two regulatory holes: light-touch Information Service and heavy-handed Telecommunications Service.
They wisely chose the light-touch hole - and the Internet exploded. Nothing in the history of humanity has grown better, bigger, stronger, faster. Thanks to their decision - the Internet is the free speech-free market Xanadu we enjoy today.
Very stupid Net Neutrality - is the attempt to retrace our steps and instead stick the Internet in the heavy-handed hole. Which would be a very stupid thing to do.
We now face the exact same regulatory choice with cryptocurrencies: light-touch Money-Transmission - or heavy-handed Securities.
We should learn the lesson of the Internet - and go light.
If we do not learn this lesson - and go heavy - we may hand the entire cryptocurrency world to Communist China.
This is not an idle threat.
A decade-plus of awful domestic policy is threatening to hand the entire Fifth Generation (5G) wireless network world - and the Internet of Things - to China.
Just as a decade-plus of awful domestic policy is threatening to hand the entire Intellectual Property (IP) creation world to China.
I know what you’re thinking - China is Communist. That means HUGE government.
Yes - but China ain’t stupid. They offer all sorts of special regulatory dispensations - in order to attract businesses to their shores.
But fair warning: Once China has you - it HAS you. Ask Apple. Ask Google.
Communist China is the mob law office in “The Firm”:
“Young up-and-coming Harvard law grad Mitch McDeere is being courted by major law firms across the country, including Chicago, New York & Los Angeles…. (H)e decides on a small but prosperous firm in Memphis, Tennessee (that lavishes him with incentives)….Mitch is soon approached by FBI agents and the U.S. Department of Justice who inform him that the law firm he works for is heavily involved in the criminal enterprises of a mob family.”
China’s Communist government - is a mob family.
If their offer is too good to be true - you better believe it is.
The only two economies - and thus countries - that currently, really matter on the planet are the US and Communist China.
If our governments make things unpleasant to do business here - businesses will do business there.
As demonstrated by the last five-plus decades of our bleeding businesses to China.
And China ain’t stupid. Having stolen much of the 20th Century - they are now setting the stage to steal as much of the 21st Century as possible.
The Intellectual Property that makes everything else possible. The Internet. The wireless Internet of Things.
And, conceivably, cryptocurrencies.
If the SEC over-regulates them.
Here’s hoping the SEC does not.
This first appeared in Red State.