Legislators now have an incentive to create legal frameworks around the blockchain and digital currency industry. Before, both industries were full of early adopters, enthusiasts, and technologists who understood how blockchain technologies would play a vital role in the world’s future. At the time, the digital currency industry was only a few years old and it was either not on the radar for regulators or they felt that the sector was too insignificant to spend their resources on.
But now, the industry, as well as the industry participants, have changed. Today, there are far more legacy banking, finance, and fintech enterprises crowding the space. Over the past few weeks, we have seen companies like Tesla, BNY Mellon, and Mastercard announce that they would be getting involved in the blockchain and digital currency industry in some capacity.
Regulations are needed
With legacy enterprises entering the blockchain and digital currency industry in mass, both industries will inevitably get prioritized by lawmakers.
Hester Peirce, a commissioner on the Securities and Exchange Commission, recently commented on the matter saying that legacy companies entering the industry “adds to the urgency of us taking some sort of action in this area to provide more clarity.”
The institutions that we see entering the industry have hundreds of millions of users located around the world, that being said, regulators have more of a motive to create guidelines opposed to when the blockchain and digital currency sectors had far fewer participants.
The legacy service providers that we see entering the space have a lot of influence in their sectors, economies of scale, and the ability to impact many lives, so legislators will be sure to put regulations in place that will best protect consumers.
When will change come?
With a new administration in place in the United States, the U.S is likely to see these regulatory guidelines created sooner rather than later.
“It’s not only that there have been calls for clarity for some time and that a new administration brings the chance to take a fresh look, but it also is a moment where it seems others in the marketplace are also taking a fresh look,” said Peirce.
Janet Yellen, the treasury secretary of the United States that was appointed by Biden, has already made several statements regarding blockchain technology and digital currency. Her statements reflect the idea that blockchain technology can improve the efficiency of many of the world’s current systems, however, she also mentions that she is cautious when it comes to digital currency because some have been used for ‘illicit financing’ in the past.
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