Americans and lawmakers have taken a crash course in cryptocurrencies over the past few months. Unless something changes, I may not attend next semester. While the current environment threatens the very existence of crypto assets, it also has considerable implications for traditional market participants and the broader economic future.
Before the collapse of the cryptocurrency exchange FTX, most Americans were vaguely familiar with cryptocurrencies. A few held crypto assets, and some relatives and friends invested in them, but many only saw the hype at last year’s Super Bowl and other sporting events. Cryptocurrency, which seemed innovative and perhaps a little odd at the time, now smells of scandal.
As we enter a new year of expected regulatory and legislative action, crypto assets are certainly in the midst of a crisis. Without the efforts of market participants to shape the digital asset ecosystem beyond what Americans and politicians see in the news every day, the so-called “crypto winter” could easily turn into an “ice age.” might break in.
Impact across industries
Given the gravity of what has happened so far, this is an enormous challenge, but one that is also necessary given the impact it will have on America’s economic competitiveness and traditional market participants.
When thinking about what the problem is, you need to think in the proper context. Crypto-assets represent a new financial innovation, but they also reflect a broader trend of digitization in finance that has occurred over decades and is unlikely to change.
Those who have followed the history of financial innovation have seen this cycle before. Innovation happens among many new market entrants. Most fail, only some succeed, but in the process traditional market participants take elements of innovation, use them for their own benefit, and normalize them in the everyday economy. .
Recent examples include businesses adopting blockchain technology and banks experimenting with stablecoins to move resources quickly and efficiently.
As many experts recognize, the crypto ecosystem is currently largely contained within its own ecosystem. Forward-looking market participants understand trends. The future of the economy may be digitized, tokenized and possibly decentralized. The rules put in place for crypto-asset innovation will also affect traditional market participants who seek to use crypto-asset innovation for their own benefit.
take the lead in policy
Policies currently in place will affect the earnings of cryptocurrency companies and traditional financial institutions. But it also has implications for the future of the American economy. To continue to lead the global economy, America needs to continue to lead policy in an increasingly digitalized and tokenized financial system.
The period of policy leadership will not last long. Several countries, including China, are already ahead of the United States in the area of central bank digital currencies (CBDCs). Moreover, the EU is far ahead of the US in developing a comprehensive regulatory framework for crypto-assets. If we don’t shape our future economies to best serve our people and businesses, other countries will own more innovation, efficiency and jobs.
With the financial system and America’s competitiveness on its shoulders, the crypto industry needs to move quickly to undo the damage of the scandals of recent months.
First, we must understand the deep skepticism of cryptocurrencies among policy makers and the American public. Talking happily about a utopian future for crypto assets is unacceptable to Congress, regulators and the public. No one takes the crypto industry at its word.
Dispel the negative image of FTX
Unfortunately, the actions of a few bad guys may have killed that chance. Those who believe in the power of cryptoassets are encouraged to help define the current environment, present real-world use cases for cryptoassets, and demonstrate how the era of financial innovation can positively impact the general public. , we need to act quickly.
The FTX bankruptcy wasn’t about cryptoassets per se, it was about corruption. The cryptocurrency industry needs to be vocal and articulate on this point.
Sam Bankman-Fried committed old-fashioned asset misappropriation and customer fraud. His crimes were possible without him being crypto. Crypto assets just became the arena for his cheating.
Unfortunately, Bankman-Fried’s misconduct has shaped the image politicians and the public have of crypto. Despite the fact that much of the community is driven by a desire to reform the financial system and improve the lives of those outside it.
Together, the cryptocurrency industry must hold itself accountable and embrace proper regulation. Showing zero tolerance for scammers and money launderers will also help convince politicians and the public of the legitimacy of allowing crypto innovation to continue.
Moreover, an industry that recognizes that it must exist within regulation as part of the normal economy is well positioned to advocate rules tailored to its own innovations.
The industry’s ultimate goal should not be to “grow at all costs” or to obsess over rising prices. You have to replace the thirst for growth that excites you with real value propositions.
Many in the crypto community have fought for it for years, but were swept away by scandals like FTX.
The cryptocurrency industry has a big responsibility to get back on track after the FTX bankruptcy, but so does the political community. For cryptocurrency innovation to benefit the economy and the general public, it must be free of partisanship.
Those on the right, who see crypto as a way to starve the beast of government, and those on the left, who dismiss true financial innovation as just a Ponzi scheme, are desperately needed. impeding concessions across all partisans.
Crypto assets will never go away. Banning is virtually impossible. Politicians should not wish cryptocurrencies to go away, but recognize the underlying digitization and tokenization of the economy.
As the FTX-related lawsuits unfold, the cryptocurrency crash course for citizens continues. This useful course will likely be gone next semester, but it doesn’t have to be.
A pragmatic commitment to basic rules and a sincere effort towards bipartisan consensus in the political arena will help traditional market participants who want to capitalize on this innovation to stay competitive and shape the rules of the economy of the future. It can have a positive impact on countries that aspire to set it up.
Mr. John Rizzo: Senior Vice President of Public Relations at PR agency Clyde Group. He was a former US Treasury Department senior communications officer with experience covering digital assets, fintech, climate finance, financial stability, and domestic financial and economic policy.
｜Translation and editing: Akiko Yamaguchi, Takayuki Masuda
｜Original: How Industry Can Prevent the Crypto Winter From Becoming an Ice Age
The post What you can do to prevent “crypto asset winter” from turning into an ice age[Column]| coindesk JAPAN | Coindesk Japan appeared first on Our Bitcoin News.