Ruby Protocol — Crypto’s Three Regulation Possibilities
Those who follow the development of Ruby Protocol now know our stance on crypto regulation. However, to dispel any misunderstanding, we like to iterate that regulation has its merits.
Regulations, in their essence, are intended to protect people on the spectrum. Financial Regulations can prevent financial fraud and limit the risks financial institutions can take with their investors’ money. In addition, it enforces applicable laws; prosecutes market misconduct cases; protects clients; and helps people maintain confidence in the financial system.
For the sake of this argument, let’s now leave how effective the current regulatory framework is out of the equation and agree that regulation, in definition, has its merits.
Since their initial development, Crypto and blockchain have been inextricably involved in finance and transaction, which understandably attracts the attention of many regulatory institutions worldwide. Since then, many crypto projects and companies have been working hard to meet the men in the suit and their standards. And they should.
Realistically speaking, regulation might be the biggest hurdle for Crypto to reach its vision.
Philosophically speaking, the yin and yang will always be there. So it may be time we strive for balance.
The Good
For starters, more regulation could mean more stability in a notoriously volatile crypto market. For this reason alone, regulations must come up at some point, stabilizing the market further and protecting investors. And Crypto needs a “rules-based environment” to attract real institutional capital into the digital-asset industry, and much of that regulation needs to conform to real-world finance.
The regulations established at the current stage are defensive, meaning it predominantly aims to protect long-term investors, prevent fraudulent activity within the crypto ecosystem, and provide clear guidance to allow companies to operate in the crypto economy.
One of the best examples is the regulation imposed on centralized exchanges. To ensure fiduciary duty, cryptocurrency exchanges in the United States and most countries fall under the Bank Secrecy Act (BSA) regulatory scope. In practice, cryptocurrency exchange service providers must register with FinCEN, implement an AML/CFT program, maintain appropriate records, and submit reports to the authorities.
The Bad
However, the crypto movement is aggressive and progressive. Many cryptocurrency enthusiasts still fervently oppose new regulation, saying it would hinder innovation and goes against the spirit of cryptocurrency, which emphasizes decentralization at its core.
Unlike traditional currencies, the decentralized nature of digital currencies like Bitcoin isn’t backed by any institution or government authority. So to many who work in Crypto, decentralization is a feature rather than a bug, and any new regulation that threatens it should be fought without reservation.
Unfortunately, the fact that there’s no precedent to blockchain and Crypto in human history makes many regulatory attempts appear like farces. And it is possible to say, judging the historical interactions, it may have even created a dangerous semblance of antagonism between Crypto and worldwide authorities.
For example, Mailchimp deactivating crypto-associated accounts with no warning, for a second, sent a chilling message that people in power really hate Crypto.
Likewise, the American government adding Tornado Cash, an uncensorable, permissionless, and agnostic service to its blacklist shows that it’s entirely possible that regulators don’t understand the spirit of Crypto, the distributed blockchain technology, and how open-source code can be anywhere.
Three Regulation Possibilities
In the end, we are likely to face three possibilities: No regulation, Bad regulation, or Good regulation.
If history is any good, no regulation is not an option.
Criminals have leveraged technological developments throughout history for illicit activity, and banning the technology, or bad regulation, would be more detrimental than constructive. Should the Tornado Cash sanctions go unchallenged, so many things we take for granted could be jeopardized while inhibiting future advancements and breakthroughs we can’t even imagine today.
What is good regulation? How to define it? This is undoubtedly a billion-dollar question. However, an ancient aphorism, probably coined by Euripides (485–406 BC), says, “Time will explain it all.”
However, the crypto community deserves a more proactive explanation. We believe good crypto regulation should be balanced, uphold specific values, and be empathetic to our vision.
We, those of us in this ecosystem and this industry, have created a new financial foundation for the world. This is a huge responsibility, and the entire purpose of this financial foundation is that all of humanity can use an open immutable financial layer.
We are separating money from politics, and we are separating money from the state the same way that the church was separated from the state and everyone now hails that as one of the greatest things that happened to humans. So now it comes down to us to do the same for money.
Money is as or more important to people than religion is. We interact with it every day in all sorts of manners. And just as mathematics or language are immutable and open to the entire human race, so should money exchange and management.
That is the principle that makes this entire ecosystem important, and that is the principle that justifies everything that we do. And if we lose that, it will be something that we regret for the rest of our lives because we have that opportunity.
However, let us do not forget this includes policymakers too.
Because you are one of us too.
About Us
Ruby Protocol is a private data management framework for Web 3.0 that proposes and implements a privacy layer interacting with the multi-chain ecosystem. It is a fine-grained private data access-control gateway across different entities and organizations in the decentralized and traditional financial world.
