Problem With Blockchain Regulation [Regulation 101]

World Regulation

The Blockchain industry is growing rapidly across the globe. Since 2008, there has been a surge in cryptocurrencies, developers, exchanges and crypto based communities. The world is slowly beginning to adopt the new age of digital assets.

Blockchain Regulation

One thing that seems to always lag behind is regulation. Stunted by some of the world super powers, regulation seems to be years behind the current market. Countries like the U.S., China, India and the EU in general are struggling to put forward relevant criteria on the regulatory Stand off. Most recently in 2019 a few things have happened that will hopefully start to change the scene:

  • The Security and Exchange Commission (SEC) released guidelines on how they will classify digital assets (Securities or not)
  • FedEx, UPS and DHL join forces with over 500 other companies to demand governments to adopt a standardized position on blockchain in supply chain management
  • The ETF’s were denied once again and will be up for vote to hopefully enable the first Bitcoin ETF in the summer
  • Wyoming announces bills to become the first state of the U.S. to properly classify digital assets and provide regulatory clarity
  • The U.S. announces their position on Tether and the Bitfinex scandal

What Needs to Happen Now

With all of the good news surmounting blockchain regulation, there is still a ways to go. A few things need to happen for the market to move forward. First, the SEC needs to start to properly classify the top 50 – 100 digital assets as securities or not. This will provide investor confidence and confidence in the market for larger institutions. Second, the SEC needs to approve the Bitcoin ETFs and futures platforms that are being put forth. Additionally, the Bakkt platform from ICE needs to be approved and pushed into the market to provide more liquidity and investment options.

Afterward, the market will organically start to weed out the bad actors from the good ones through exchange priority and market markers. We have already seen Binance, Kraken and other exchanges remove the infamous Bitcoin Satoshi’s Vision coin that Craig Wright (Fake Satoshi) leads. In our view, this is the best thing for the market. Bad actors need to removed from the crypto scene as fast as possible to not spoil the whole pot.

What Governments Need to Do

Following regulatory approval and classification of digital assets, it is the government’s turn to provide stability to the industry. There needs to be global standardization of General Data Protection Regulation (GDPR). If countries want users to have complete privacy and ownership of individual data, then corporations need to utilize projects like HyperLedger or construct private, premissioned blockchains to protect customers. If this is to become an industry standard, then projects like Ethereum will have to adapt or offer off-chain solutions to cater to these new rules.

Where Is the Market Headed Next

With the market recovering from the past bear trend, what’s next? We had the First generation of cryptos like Bitcoin and Mastercoin. Then we moved to the Second Gen with projects enabling dapps like Ethereum and NEO. The last bullrun concluded on the third generation of projects that offer scalability and enterprise ready applications like Cardano, XRP, Iota and EOS. This leaves us wondering, What is next? We think we have an idea, clustering. There will not per say be a “fourth generation”, but there will be a period of projects grouping together to form super chains. These super chains will be enables through interoperable coding that enables cross-chain transactions and data storage. This will be extremely useful as we approach ideas like smart cities and autonomous cars. We would venture that before long, larger projects will start to form alliances and try to leverage connections and partnerships to seek new exciting endeavors.

Crypto to Crypto

This is entirely speculation, but it would make sense. We have seen the first ever merger as well with 2 crypto projects just this month in April. The projects DOMO and HEPTA have decided to Merge. This means that Projects like DOMO are reaching out to dying or stagnant projects like HEPTA and offering a deal. DOMO provides HEPTA holders with an exchange rate and trades DOMO tokens for the HEPTA ones. In the process, DOMO gains most of the HEPTA community, developers and following. This is a win win for dying projects and bag holders of tokens that are stuck. Maybe they can not get on a good exchange, maybe there is not enough liquidity or something similar. Either way, with the prolonged bear market more and more projects will start to seize this opportunity.