Crypto Needs To Be Regulated

12 Mar 2023

The cryptocurrency sector is currently a no-man's land, a digital wild wild west.
From inception, one of the driving mantras in crypto has been "freedom". Freedom to own your own money, freedom to use and utilize it without having to be subject to the whims and caprices of directors, boards and political governments and the freedom to raise and empower yourself with some financial stability.
I love the idea of freedom that is possible with cryptocurrencies but unfortunately, as it stands now, the bad players have taken over with hacks, rug-pulls, scams and centralized administration. Even so-called legit players like FTX have turned out to be scams.

Based on these, it is my opinion that crypto needs to be regulated to some degree else it is going to degrade to total chaos.

Most of us live in free societies. We are free to do and own whatever we like, be it cars, houses, businesses, etc. But certain persons/organizations take advantage of these freedoms and commit acts that put the rest of us in misery. To combat this, the police and other regulatory bodies were set up. The purpose of the police and regulations is not to deny or restrict our freedom but rather it is to protect our freedom and ensure that we can enjoy it. And that is exactly what crypto needs.
Billions of money have been lost/stolen from crypto investors and this is possible because there are hardly any regulations to curtail the activities of bad actors and ensure that the crypto space is safe.

Possible Solutions
The major problems currently plaguing the crypto world include hacks, rug-pulls, scams, lack of insurance coverage and lack of accountability by crypto projects.
A decentralized autonomous organization (DAO) could be setup to act as some sort of crypto regulatory body. Cryptocurrency projects that wish to be considered legit will have to register with this body.

The DAO will then set up and enforce regulations including the following;
- Crypto projects that collect funds should have their key members KYCed and their names and legal information documented.
- Crypto projects providing services where the amount of investor funds held by the project exceeds certain levels should be made to provide insurance cover for those funds.
- Every project that intends to hold a pre-sale, ICO, etc, must do so using a reliable and certified launchpad where investor funds are held in escrow until pre-determined conditions are satisfied. This will reduce instances of projects collecting people's funds and then vanishing.

The DAO could maintain a publicly accessible database where projects that have complied with the safety regulations are listed and investors can verify the status of any project they wish to invest in. Projects that fail to abide by such regulations could be blacklisted and isolated from interacting with legit players (Exchanges won't list their tokens, other crypto projects won't partner with them, etc)
Crypto doesn't need excessive government regulations but needs to cooperate with government agencies when it comes to identifying and catching criminals who have
stolen from others.

If regulations, such as those outlined above, in addition to others, are put in place, we will then be able to truly enjoy the freedoms of cryptocurrencies in a safe environment.

Thanks for reading.

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