The way in which the US infrastructure bill went through the Senate was to some crypto onlookers arcane, and at times incomprehensible. Lessons need to be learnt if crypto lobbyists are to be more effective in the future.
It would have appeared to be a fairly simple task at the beginning. Just get an amendment passed that would clear up any uncertainty as to exactly who the term “broker” referred to, and surely everyone would have agreed to it.
However, the US Senate does things the way it has always done things. It wasn’t up to the Senate to change things, but for crypto to be far more prepared for the process, and to use “the language of Washington”, as stated by Charley Cooper, managing director of R3.
Cooper, of technology company R3, wrote an article on Bloomberg this morning, where he put forth his view that the crypto community needs to learn 3 vital lessons in order to be more successful.
Work with regulators
Cryptocurrencies are thought by many to be the antithesis of the old-world order that reigns over the traditional monetary system. However, after the infrastructure bill debacle, the crypto community is beginning to wake up to the fact that in order to operate, it is going to have to play ball with government and regulators.
According to Cooper, those who were building out crypto should have been working with regulators from the outset. Now, they are furiously struggling to get on board.
Relationships should have been built with the monetary authorities in order to build out crypto financial services such as DeFi, in a way that protects investors, and ensures a safe and regulated environment.
Regulatory authorities are not the enemy
It’s difficult not to take the view that crypto and regulators sometimes appear to be sworn enemies. On the one hand you have Gary Gensler, chairman of the SEC calling crypto “the wild west”. While on the hand you have prominent members of the crypto community saying that regulators don’t understand the intricacies of crypto, and that the industry will be driven overseas if regulation is too severe.
However, there are lessons to be learnt from the unsuccessful Facebook-backed Libra, and then Diem projects. The failure to get government and regulators on board meant a massive backlash from the same entities once Facebook decided to seek approval before launch.
Cooper’s view is that the authorities need to be constantly aware of how technology is changing in the crypto sector, and then there will be less chance that regulators are caught off guard and feel forced into imposing stricter regulations. “Proactive relationship building” is what is recommended.
Complete decentralisation is not the future of finance
In spite of the view of many developers within the crypto industry that complete decentralisation is the goal, Cooper believes that this just won’t happen. For it to do so, it would have to exist outside the borders of the existing financial system, and governments and regulators just wouldn’t allow this.
Instead, Cooper thinks that a “hybrid” system will be the eventual outcome. He says that the current financial system has evolved over a very long time, and that new technology has been integrated successfully into the existing system.
The belief that this wildly innovative new system can just depose and replace the existing system is completely out of whack according to Cooper. His idea is that if the crypto industry refuses to enter wholeheartedly into a proper dialogue with regulators, then things can turn out extremely badly.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.