The current bear market in cryptocurrencies could lead to an easing of regulatory focus, suggests one crypto legal expert.
“A small bright side of a crypto bear market is that it can relieve some regulatory pressure,” said Jake Chervinsky, policy officer for the Blockchain Association. “For good reason, regulators with limited resources focus their attention on issues of widespread impact and systemic importance. ”
In a thread on Twitter, Chervinsky argues further that shrinking markets lowers crypto’s risk profile, which has been the top concern for regulators.
Not like 2017
To make his point, Chervinsky compares the situation to the last in-depth review instance, during the ICO bubble of 2017. After witnessing what happened to many attendees at the time, he said that watchdogs are much more concerned this time around about the damage that could be sustained given the extent to which the crypto has grown over the past year.
Chervinsky also said the way the market had developed did not paint a very encouraging picture for regulators as well. “The bull market kicked off with ‘degens’ farming food tokens in mid-2020,” he said. “Fast forward through 18 months & billions of dollars of speculation in dog money & jpegs, not to mention hacks & rug pulls, & you can see where regulators are coming from.”
Chervinsky also pointed to several developments from 2017 that raised the ante in the eyes of watchdogs. Some of them relate to cryptocurrencies; greater participation of retail in the growth of decentralized trade and “(and this is much more important) other external factors, such as” global monetary and fiscal instability due to covid, the rise geopolitical tensions and a growing national partisan division “.
“Room to breathe”
Influenced by their experience during 2017, Chervinsky believes that the SEC’s current approach has been “not about coherent regulation, it’s about crushing the market.” However, he also believes that this year they have also started to “see the genuine value & potential in crypto.”
With lower prices and less volume, this means fewer retailers, which minimizes overall risk, decreases the need for public intervention, and leaves some “space to breathe”. Tchervinsky concludes. “In that sense, the short-term pain of a bear market could support long-term progress.”
