We can use crypto regulation – but let’s start with basic definitions

As a crypto boss, I know how often our sector is misunderstood and criticized. Sometimes the criticism is deserved because we have not always done our part to shed light on the usefulness and use cases that drive positive change. But other times it’s based on the assumption that all players in this industry are the same, which just isn’t true.

Recently, skepticism reached new heights with the epic crash of FTX, one of the largest crypto exchanges in the world – and perhaps the biggest example ever of the need for regulatory oversight. Given the positioning of FTX, it was an incredible step to see them face insolvency. When the news broke, we saw a massive decline in the digital asset market. Consumers were left to decide whether FTX – or any entity in our area – is a safe steward of their money.

Many may wonder if there is a future for crypto, and I understand the frustration with the hole the industry has created. But there is a future for blockchain and crypto, and we cannot lose sight of the utility and value of this technology to do meaningful things – from optimizing supply chains around the world to creating equitable access to the global financial system. The real question is how we build the future we want that inspired the development of this technology in the first place. And that answer is largely dependent on standards (both technical and industry-wide) and regulations, some of which must come from our public officials.

Related: From The NY Times to the WaPo, the media is wondering about Bankman-Fried

The US federal government is positioned to lead. To do so, it must provide industry with clarity and guidance by implementing thoughtful, principles-based regulation. This is the kind of leadership that will help shape the “right” future, and with a newly elected Congress, it’s a charge I urge them to take up. The future of blockchain and all the benefits it offers depends on it.

The industry must do its part to act transparently and in the best interest of consumers, despite the absence of regulation. But without oversight, we will continue to see examples of businesses failing to put consumers’ interests first. That’s why I’m asking Congress to pass three important measures in 2023 to give consumers the protections they need.

First, clarify the definition of the legal status of digital assets: When are digital assets classified as securities, commodities, or something in between? And how is it defined? It is the role of the authorities to make this clear to both large and small participants – and not just pretend there is clarity – because it is the consumers who lose.

Second, require stablecoins to be stable: The Terra collapse saw $60 billion in value disappear overnight. Consumers must be assured that stablecoins must be backed by high-quality liquid assets on a one-to-one basis. Stablecoins are essential to the real utility offered by blockchain. Rules of the road here are useful for consumers and will lead to even more innovation.

Third, exchange of digital assets. As we have seen with FTX, consumers are exposed to risk when trading and holding their assets with exchanges. While some of these risks are well understood, Congress must ensure that consumers have the necessary safeguards to engage with these platforms.

Related: My story of telling the SEC ‘I told you so’ on FTX

My experience on the content side of the web taught me the importance of early engagement with policymakers to help shape regulation for new technologies. But I learned this lesson the hard way – we didn’t engage. Instead, we asked the government to trust that we would get it done on our own. We thought we had all the answers. Some regulations already existed for data collection activities on the internet, but none accounted for the data collection technology companies did every day. Balancing our bottom line with the best interests of consumers created a big gap we thought we could manage. It is clear now that this led to a privacy crisis where people became the product, and our collective and individual privacy disappeared before our eyes.

I see certain parallels with blockchain, the new emerging technology. It is crucial that the ecosystems that develop the products and services built on this technology continue to work together with the public sector to create the regulations that will bring clarity and security. I know the unlimited potential of blockchain and am eager to help forge the public-private partnerships necessary to ensure more stability in this industry. And I hope that a new Congress will meet us halfway.

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts and opinions expressed herein are those of the author alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.