Cryptocurrency and the blockchain offer intriguing use cases for many businesses and organizations, but they’re relatively new technologies and are only starting to be implemented. A lot must happen for this technology to reach its full potential, from better user experience to improved infrastructure. Few can argue that for crypto to move forward, better regulations are needed. Many do argue, however, about what those regulations should look like. When it comes down to it, these regulations need to be clear and fair.
Quite simply, most businesses are tired of acting in the dark. They want clear regulations so they know the parameters of how to move forward with their business without the possibility of legal action hanging over their head. Because of the current climate of uncertainty, businesses are domiciling or redomiciling away from the US. For the US economy, no regulatory clarity is as damaging as insufficient clarity. Whatever regulations end up being adopted, they need to be implemented quickly and clearly.
Inevitably, acting quickly will end up unfairly harming some businesses. But what is fair? Being fair sounds nice, but in practice it’s almost impossible to achieve. “Fair” is subjective, with vast possible differences depending on your point of view. What would be fair to a casual investor might not seem fair to a central bank, and what a government agency sees as fair might not be considered fair by a crypto startup. Debates and compromises to make regulations in the US fair for as many people as possible will take years, way too long if the US wants to be any kind of leader in this technology. That puts us between a rock and a hard place. How can we be both clear and fair?
Believe it or not, there’s a precedent that could help everyone: the DMCA.
The Digital Millennium Copyright Act made it illegal to make and distribute services, tools, or technology with the purpose of accessing protected copyrighted works. This ban was intended to stop copyright infringement, but situations have arisen with the development of technology where the DMCA has inadvertently inhibited competition or infringed on free speech and fair use. The drafters of the DMCA knew that placing strict regulations on such a dynamic field as digital technology would make the law antiquate within months, so they built in a provision for events they couldn’t imagine.
The U.S. Copyright Office meets every three years to hold hearings which reassess the impact of the law. They grant exemptions to the DMCA where the law harms legitimate uses of copyrighted materials. Whatever you feel about the DMCA and its execution of these hearings, the process itself is forward thinking. It makes the law adaptable to new innovations in digital technology, and that’s what the crypto space needs.So, what is fair? From where we stand, fair is adaptable. Yes, we need clarity in the crypto space now, but whatever set of regulations is set in place needs to include a mechanism of change that allows for the growth of the technology. When the DMCA was enacted, they couldn’t envision how it would prevent a car owner from repairing their own car. Similarly, right now we can’t envision the extent of cryptocurrency and blockchain technology’s potential, nor can we envision the full impact of any regulation.
It would be a monumental error to think we’ve reached a vantage point where we understand and value this technology profound enough to create rigid new laws to govern how it will develop. Regulations, both clear and fair, are needed to provide cryptocurrency a vehicle to realize it’s true potential. We’re in a unique point in time where we can create a vehicle that can traverse whatever road it comes across; an ATV lambo, if you will.