Everyone wants crypto regulations, on their terms

The narrative Theres a growing push from the crypto industry to suggest how regulators can approach this rapidly-growing sector.

Why it matters So, these proposals could be seen in two different ways. The first is as a serious policy push that industry players hope will one day come to fruition. The other is an effort to kick-start a conversation around how crypto should be regulated.

Breaking it down I was in Washington, D.C., last week meeting folks both from industry and from the offices of various lawmakers and its really not yet clear to me what sort of traction these industry-driven proposals will gain. Ignoring for a minute the difficulties in passing a bill through both the U.S. House of Representatives and Senate, the proposals themselves would require buy-in from a broad swath of both regulators and the lawmakers overseeing them.

Clearly, the industry is hoping to have a hand in creating a favorable regulatory regime in the U.S. Crypto exchanges Coinbase and FTX, venture capital firm Andreessen Horowitz (a16z) and the Digital Dollar Foundation have all recently published suggested policy proposals for addressing the digital asset market, ranging from creating a dedicated regulator for crypto to detailing how a central bank digital currency could address privacy issues.

Story continues Much of the reception to these proposals has been that they may all be nonstarters. Lawmakers arent interested in letting the crypto industry define the terms of its regulatory framework for various reasons, according to some of the individuals I spoke to. On a substantive level, even crypto-friendly lawmakers seem to disagree with the premise of pouring excessive resources into developing novel tools for overseeing crypto.

(Seriously, its kind of amazing how many different people brought up recent tweets as examples of how to not make a case for favorable crypto regulation.) If these proposals arent meant to be taken literally, but rather as a spark for conversation, then they may actually be going somewhere. While the proposals themselves are varied in scope, they share some common themes: being precise in defining terms, calling for greater transparency and user privacy concerns. Tweets and public statements lambasting regulators are also not impressing the lawmakers who might look at these proposals. They might even be counterproductive if the goal is to be taken seriously, say Washington insiders.

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