David Shrier Opens up on Regulatory Concerns
Regulation has likely been the most significant driving force in the cryptocurrency markets in the past year. Following the massive explosion in both price and public infatuation with cryptocurrencies and blockchain technology drew the attention of regulators all around the world, who decided that a prompt response to the industry was needed to avoid the ramifications of an unregulated securities market in the 21st century. The United States has been particularly interested in regulation, though authorities have been slow to keep up with the quickly-moving progression of the industry.
Regulatory concerns are at least somewhat justified. Though the libertarian backings of many of the original cryptocurrencies might be inherently predisposed to detest government intervention, the past two years have given officials reason to suspect that there might be wrongs in the existing cryptocurrency markets that some forms of regulation might be able to effectively address. In particular, money laundering and fraud on the blockchain is common, perhaps as a direct consequence of the anonymous and decentralized nature of many digital assets.
David Shrier is both the founder and the current CEO of a think-tank organization known as Distilled Analytics. With a distinguished background as an MIT lecturer and an Oxford associate fellow, Shrier has been an outspoken follower of the developing cryptocurrency and blockchain industries, both of which have seen enormous expansion in the past few years. In an interview with magazine Finance Magnates, the expert spoke on some of his views regarding the regulatory past—and present—of the emerging crypto scene.
“New Solutions Needed”
Shrier was quick to espouse that there are major issues in the industry that must be addressed. This should come as no surprise to those who have closely followed the Initial Coin Offering (ICO) bubble of 2016 and 2017. Corruption, money laundering, and heavy financial fraud permeated the market, shining a dangerous spotlight on the worst of the cryptocurrency markets and their participants.
In particular, the MIT lecturer outlined that the industry is in desperate need for more and better “anti-money laundering” and “know your customer” technologies. This remark echoes the concerns of many regulators, that the crypto space allows transactions to easily happen with little liability or available information on the source of the money coming in. The money laundering concern is especially important, considering that some money laundering schemes using cryptocurrency are linked to as important public events like the U.S. Russian intervention investigation.
Regulation is Inevitable
Shrier also emphasized his view that, whether people like to recognize it or not, Bitcoin is already being regulated all over the world. He stated that people within the cryptocurrency community trying to defy regulation are effectively seeking to “defy the laws of gravity.” The mere fact that Bitcoin has become a significant financial sector in which many citizens are involved is enough to conclude that it will fall into the regulatory hands of the government.
Again, this opinion doesn’t seem to be out of the ordinary. Aside from heavily anti-establishment bubbles within the community, the general sentiment is that Bitcoin is an economic asset which will undoubtably eventually face the full-force of regulation by entities in the United States—and around the world. And even now, according to Shrier, Bitcoin is still heavily regulated in the status quo within many parts of the world.
Testing the Boundaries
Dave also believes that the industry is expected to frequently test the legal boundaries being set up by regulators in the United States and in countries around the world. This is to be expected, according to the expert. He cited Uber as an example of a company exploring a relatively new sector that was able to occasionally violate existing laws with reasonable deniability.
For the cryptocurrency community, this professional believes that the industry will likely try its best to skirt government regulations in the vein of trying to achieve better innovations and maximize profits when possible.
More importantly, Shrier is convinced that most regulators are generally alright with this happening. According to him, regulatory authorities plan to be slow to intervene as the industry attempts to find its place in a complex regulatory framework. Just like businesses and participants within the market, regulators also want to see innovation come out of the evolving sector.
A “Fairly Progressive” Philosophy
Coming out with more good news for the cryptocurrency community, David Shrier outlined that many major regulators globally are taking a relatively progressive and embracing strategy to regulate the budding cryptocurrency industry. In particular, he highlighted the OECD and the European Union as two entities who are trying to maximize innovation and fairly regulate a changing marketplace.
Even the United States is beginning to “catch up” on cryptocurrency, according to the analyst. Though he holds the opinion that EU and the OECD are still leading the charge in creating thoughtful compliance systems and effective regulatory frameworks for crypto, the United States is slowly beginning to warm up the idea, which they have apparently considered for quite some time.
Manipulation of prices might just be the issue that turns many of the libertarian-minded cryptocurrency community members onto the side of thoughtful and effective regulation. Blaming it primarily on “whales,” or accounts holding very large amounts of a given cryptocurrency, the community is quick to lament the manipulative prices which seem to underscore the modern cryptocurrency markets.
Dave outlined that cybersecurity prices and risk management policy compliance are two easy ways that companies in the space can attempt to limit manipulation within the markets. The free-flow of tokens on major cryptocurrency exchanges pose one obstacle to stopping manipulation, says the expert. In order to prevent manipulative trading practices by the “whales,” Shrier believes that the cryptocurrency community might need to adopt some of the safe practices that have been in place for hundreds of years within the traditional financial sector.
As the crypto space continues to evolve, combating illegal practices and price manipulation will be key to a regulator’s positive impact on the growing market and community.