Crypto sector must be less combative with regulators
The response of Grayscale Investments, a cryptocurrency management company, who had its bid to list the first spot Bitcoin exchange-traded fund (ETF) denied by the US Securities and Exchange Commission are damaging, reactionary and unhelpful to the wider crypto sector.
The firm on Wednesday sued the US financial regulator after it denied a proposed spot Bitcoin ETF saying Grayscale had not demonstrated that its proposal reached criteria to prevent fraud and “manipulative acts and practices”.
In a statement, the company said: “We are deeply disappointed by and do not agree with its decision,” adding that the SEC’s rulings were “arbitrary and capricious.”
I wholeheartedly support other crypto firms, such as Grayscale, in their pioneering, proactive attitude towards digital currencies.
I am confident that there will be a mixed monetary system, with some currencies from governments, including digital and non-digital, and some digital and decentralised, such as Bitcoin.
I even believe that as we move towards this, there’s a real possibility that Bitcoin could, ultimately, be the next global reserve currency, replacing the US dollar.
However, as an industry, we must be consistently conscious to take global regulators with us on the journey.
A failure to do so will likely only slow the progress we’ve already made in showing the governments, businesses and ordinary investors the remarkable, unprecedented potential for a better tomorrow that Bitcoin and crypto can offer the world.
Bitcoin is not only proving to offer typically great returns on investments. It’s doing so much more than that. It’s a force for social good as it can offer a way out of both financial and political repression.
But all this could be put in jeopardy should the sector react against financial watchdogs who are, mostly, trusted by the public. Why would we push against this if we’re looking for sustainable, mass adoption?
To coin a phrase, the crypto sector needs to ‘win hearts and minds’ around the world and with all stakeholders by making reasonable, measured, emotional and intellectual arguments.
Calling the SEC “capricious” is not doing this.
Last week, I was quoted in the media as saying in recent times we’ve seen many of the biggest players make huge, unnecessary mistakes.
They went for enormously expensive TV ads, jumped on highest-tier sponsorships, rolled-out lending models offering astronomical interest rates on crypto deposits, and launched unprecedented hiring sprees.
Now, what do we have? Firms laying-off swathes of staff, freezing client withdrawals and cutting back on investment.
Unfortunately, these brands have made some classic, obvious and avoidable dot-com era errors.
These mistakes destabilise the industry due to the contagion effect, exacerbate financial chaos for investors and the pain of job losses for so many who were hoping to have a rewarding career in the future of finance.
Such crypto firms would be better off – for the sake of their clients and the wider industry – growing through investing in top talent, innovation and development, and lobbying for sensible regulation with financial watchdogs.
Whilst I do not always agree with regulators’ decisions, the approach should, where possible, be collaborative, not combative.