Politicians’ Crypto Miscalculation: ‘Thought it would essentially die,’ but ‘it has grown’
The recent increase in regulatory measures worldwide may be due to policy makers finally recognizing the importance of cryptocurrencies.
An article by Liam J. Kelly published in Decrypt earlier today reported on a panel discussion – at Citi’s 10th Annual Digital Money Symposium, which took place in London on March 30 – that focused on crypto regulations in the UK, Europe and the US. At the event, Barclays’ head of digital policy Nicole Sandler argued that the apparently late response from policymakers was actually intentional.
According to Decrypt’s report, Sandler believes that some policymakers are deliberately allowing the crypto market to develop autonomously, believing that it would eventually collapse. Instead, it has continued to grow.
She said,
“I think one thing that certain politicians have said is that they left this market to do what it wanted to do because they thought it was really going to die. And it has not died, it has grown, it has grown, it has grown.“
Drawing on the 2016 discussions with the European Commission regarding a legal framework for digital assets, Sandler argued that while the crypto space may have been nascent at the time, it has since matured.
The article highlighted Sandler’s argument that regulators did not shun the market because of its infancy, but chose to monitor its progress. She noted that the challenge now is that regulation can take a long time to implement.
The Decrypt article also discussed the intense regulatory efforts in the US. Following the collapse of Sam Bankman-Fried’s FTX empire in November, the Securities and Exchange Commission (SEC) accused both Bankman-Fried and Nishad Singh, the crypto exchange’s co-lead engineer, of defrauding investors. Sandler was quoted as saying that the FTX collapse was not related to the technology itself and was primarily due to a “bad actor”.
In addition, the article mentioned the SEC’s pursuit of other crypto firms for various reasons. It detailed the SEC’s issuance of a Wells Notice to Coinbase on March 22, signaling enforcement action against the California-based exchange over allegations that its investment products constituted unregistered securities. According to Decrypt, a source close to the matter revealed that Coinbase management is frustrated by the SEC’s sudden shift after allowing US investors to participate in crypto for years.
The regulatory action has reportedly caused an uproar in the crypto community, with much of the ire directed at SEC Chairman Gary Gensler. Fellow panelist Ijeoma Okoli, as quoted in the article, pointed out that Gensler faced similar hostility during his tenure as chairman of the CFTC after the financial crisis, suggesting that his approach is not exclusive to the crypto space.
