Regulations are a tricky subject in even the most established and traditional industries.
But in an emerging space, the debate can quickly get heated. For instance, Gemini—a crypto exchange headed by the Winklevoss twins—recently splashed advertising all over NYC. The ads were adorned with the catchy, albeit somewhat cryptic, phrase “Revolution Needs Rules.”
The campaign created quite a stir, and crypto Twitter has been going crazy. Many people in the community feel that regulations are anathema to the true spirit of the crypto space. After all, Bitcoin is supposed to outlast the rise and fall of any one particular government.
Still, rules are a given in any system—you either operate within their boundaries or outside of them. I’d say that outside area is what defines a revolution.
While everyone is lining up to take a side on the necessity of regulations and revolutions in the crypto space, it’s also important to take a few steps back and get a larger view of the environment on a global scale and within different legal systems.
The crypto community is looking for guidance on how to manage the changing financial landscape.
The whole ethos of the crypto and Bitcoin community is that it should transcend centralized control of governments and banks. Bitcoin is trusted because there’s no central point of failure. It should persist forever, in theory. It doesn’t matter if the United States government collapses entirely—people will still be able to use the cryptocurrency.
So naturally, in the crypto community, there’s always plenty of backlash when people or companies push for regulations. It feels like you’re getting the government involved in something that should ideally stand apart from any one nation-state.
But regulation can be a good thing if it can actually provide clarity and create a better space for innovation. In the U.S, for example, many in the crypto community are waiting for some sort guidance from regulators. In fact, it’s a misnomer to call Gemini a “regulated cryptocurrency exchange” because there really aren’t regulations for people to comply with yet.
The campaign strikes me as a kind of call to action—not only for the users to trust, ironically, what should be a trustless system but for regulators to provide more guidance. It’s essentially saying, “Tell us how to be compliant so we can move forward with our projects.”
Unfortunately, the regulatory system is reactive instead of proactive. It's waiting for someone to mess up so the court case can begin to define the laws and regulations the crypto space falls under. That’s a scary place to be. Without that clarity, it’s risky to be a trailblazing crypto company, working in an ambiguous territory.
You don’t know if the SEC is going to come knocking on your door three years down the road.
Some form of regulation will be key to expansion.
Some view regulation as the catalyst for widespread crypto adoption. But many others, such as crypto influencer Mike Dudas, rip apart that strategy.
With its recent campaign, Gemini likely is aiming for a wider audience. Because if you think about the quintessential New York finance institutions, they don’t really care if the currency they’re using is centralized or decentralized. They don’t care about the underlying paradigm-shifting ideas of crypto. They’re looking to offer products and services to the current banks, investors, hedge funds or pensions out there. They just want to participate in a new asset class, and for them, that means knowing the company they’re working with is compliant.
Gemini is feeding into this mindset by positioning themselves as the only regulated exchange. The one you can “trust” because it has these regulations. Notice they placed their ads in traditional spaces throughout NYC—subways, cabs, buses, bus stands, the New York Times—where people in mainstream lines of work will see them.
Beyond regulation, I think the reason people are so heated about this ad campaign is that it’s essentially taking crypto and attempting to place it within the existing custodial exchange model, i.e. a crypto “bank” that holds your cryptocurrency and allows you to exchange it.
The danger with that thinking lies in the potential for someone to hack a centralized exchange and make off with the digital currency. No amount of regulation is going to protect anyone from that scenario.
The U.S. crypto landscape needs to change if the country wants to stay competitive.
Some form of regulation is required for the U.S. to remain competitive on the global stage.
There has to be guidance because, otherwise, people will be afraid to build the infrastructure and take on the projects the crypto community needs to stay competitive.
There are other, more forward-thinking, countries that have already bought in and are laying the foundation for a new financial system, but we’re still far behind. Malta, Switzerland and Singapore are all looking ahead and putting legislation in place to provide proper guidance for companies and individuals.
Do Americans want to play in that new economy? If so, the system needs to catch up. Right now, crypto isn’t necessarily being denounced in the U.S., but the government isn't doing much to foster its growth.
Ultimately, Gemini’s slogan was so powerful because it can mean different things to different people. It clearly had the power to start a discussion among a lot of passionate people in the crypto space about how these currencies are going to interact with nation-states, banks or other entities.
While it was intended to market their solution, it does present the chance to continue this conversation on how regulations, or a lack thereof, can open up more opportunity in the crypto space.
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By Samantha Radocchia Contributor