The Securities and Exchange Commission (SEC) has recently proposed new crypto rules to expand protections for assets held by investment advisers to include cryptocurrencies. While this proposal may seem like a positive development for investors and the crypto industry, it is starting to choke crypto innovation as the SEC seeks and destroys it.
Bitcoin, the world’s first and most popular cryptocurrency, was created to protect us from entities such as the SEC.
The goal was to create a decentralized currency that was outside the control of any central authority, including the government and financial institutions.
For the past few years, some crypto investors were calling on the SEC for regulation, believing that it will provide greater clarity and certainty for investors.
Sure, some regulation shouldn’t hurt in theory, but overall, Bitcoin was created for the people as a way to escape the overlords of finance.
We all know they don’t want us to get rich, as that in their eyes is a threat to the establishment.
Overall, most of us don’t care about power and control, we just want to live a peaceful life and enjoy the finer things.
The reality is that the proposed rule will only benefit a select few in the end as it always has. It will primarily benefit large financial institutions and established investment advisers who already have the resources to comply with the new requirements. Smaller players in the crypto industry, including startups and individual investors, will struggle to keep up with the regulatory burden, which will only stifle innovation unless they bow to the will of the SEC.
The proposed rule would require investment advisers to hold cryptocurrency assets with qualified custodians, including certain banks or broker-dealers. This would create additional costs and bureaucratic processes that smaller players would struggle to comply with. It would also restrict the type of custodians that can be used, limiting the options for investors.
While the SEC has stated that the rule “covers a significant amount of crypto assets,” it fails to recognize that the nature of cryptocurrencies is fundamentally different from traditional assets.
Cryptocurrencies are meant to be decentralized and outside the control of any central authority. By imposing these new regulations, the SEC is essentially trying to fit a square peg into a round hole.
Again, this is not to say that there is no need for light regulation in the crypto industry. There have been numerous instances of fraud and scams, and investors need to be protected.
However, the type of regulation that is needed is one that is tailored to the unique nature of cryptocurrencies. It should not be a one-size-fits-all approach that only benefits the established players in the industry.
While the SEC’s proposed rule to expand protections for assets held by investment advisers to include cryptocurrencies may seem like a positive development at first blush, if you ask most of us, we’re highly skeptical of the approach.
Bitcoin was created to protect us from government corruption and money manipulation. The money printing that has gone on for the past few decades is absolutely absurd. The gate keepers are creating more rules for thee and not for me. Let’s see how far the SEC takes this.