Last week should have been all about the midterm elections, and yet the attention of the technology, banking and retail worlds were instead all riveted by the sudden collapse of FTX. I hope the U.S. Securities and Exchange Commission was paying attention as well. If it spurs action, this disaster may be a blessing in disguise.
Until now, the SEC has been vague about the rules and regulations that apply to the crypto ecosystem, making it harder for genuine disruptors to start businesses that encroach on traditional finance territory with more efficient, lower-cost blockchain alternatives. Speculation, fraud and pump-and-dump token schemes are the antithesis to stable, consistent growth in the blockchain ecosystem. Chaos keeps the incumbents protected.
Details of the debacle are still unfolding, and yet it’s fair to say that clarifying rules and strengthening enforcement will accelerate the development of the broader crypto ecosystem for the benefit of society. After the U.S. stock market crash of 1929 that led to the Great Depression, we needed the 1933 U.S. Securities Act to stabilize markets and protect consumers. Could this be where we are with crypto if we act on the message FTX is sending us? Fining Kim Kardashian for unlawfully advertising a crypto security and recovering billions of dollars’ worth of stolen cryptocurrencies gives us a start, but there’s much more work to be done.
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