Policymakers’ Crypto Miscalculation: “Thought It Would Essentially Die,” Yet “It’s Grown”
The recent surge in regulatory action worldwide might stem from policymakers 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. During the event, Barclays’ Head of Digital Policy Nicole Sandler posited that the seemingly late response of policymakers was, in fact, intentional.
As per Decrypt’s report, Sandler believes that some policymakers deliberately let the crypto market evolve autonomously, thinking it would ultimately collapse. Instead, it has continued to grow.
“I think one thing certain policymakers have said is that they left this market to do what it wanted to do because they thought it would essentially die. And it hasn’t died, it’s grown, it’s grown, it’s grown.“
Sandler drew on her 2016 discussions with the European Commission regarding a legal framework for digital assets, asserting that while the crypto space may have been nascent at the time, it has since matured.
The article highlighted Sandler’s argument that regulators didn’t avoid the market due to 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 crackdown in the US. Following the collapse of Sam Bankman-Fried’s FTX empire in November, the Securities and Exchange Commission (SEC) charged both Bankman-Fried and Nishad Singh, the crypto exchange’s co-lead engineer, with defrauding investors. Sandler was quoted as saying that the FTX collapse was unrelated to the technology itself and was primarily due to a “bad actor.”
Additionally, 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 staking products constituted unregistered securities. According to Decrypt, a source close to the matter revealed that Coinbase leadership is frustrated with the SEC’s sudden shift after allowing American investors to participate in crypto for years.
The regulatory action has reportedly caused an uproar within the crypto community, with much of the ire directed at SEC Chair Gary Gensler. Fellow panelist Ijeoma Okoli, as quoted in the article, pointed out that Gensler faced similar animosity during his tenure as the chair of the CFTC following the financial crisis, suggesting that his approach is not exclusive to the crypto space.
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