A crypto legal expert suggests that the current bear market in cryptocurrencies could ease regulatory focus.
“One small silver lining of the crypto bear market is that it can take some of the regulatory pressure off,” said Jake Chervinsky, Head of Policy at the Blockchain Association. “For good reason, regulators with limited resources tend to focus on issues with widespread impact and systemic importance.”
In Thread On Twitter, Chervinsky further argued that shrinking markets lower the risk profile of crypto, which has been a top concern for regulators.
not like 2017
To make his point, Chervinsky compared the situation during the 2017 ICO bubble to the last instance of high scrutiny. After seeing what happened to several participants, he said that this time watchers are more concerned about the damage that can happen given the scale of crypto’s rise over the past year.
Chervinsky also said that the way the market has developed does not paint a very encouraging picture even for regulators. “The bull market in mid-2020 started with ‘Dijens’ farming food tokens,” he said. “Fast forward through 18 months and billions of dollars of speculation in dog money and JPEGs, not to mention hacks and rug pulling, and you can see where the regulators are coming from.”
Chervinsky also pointed to several developments in 2017 that have caught the attention of watchdogs. Some of these are related to cryptocurrencies; There are other external factors ranging from greater retail participation to the growth of decentralized exchanges, and “(more importantly) largely other external factors, such as “global monetary and fiscal instability due to COVID, rising geopolitical tensions and growing domestic partisan divisions.”
“room to breathe”
Influenced by his experience during 2017, Chervinsky believes that the current approach of the SEC is “not about consistent regulation, it is about crushing the market.” However, he also believes that this year he has begun to “see real value and potential in cryptocurrencies”.
With lower prices and lower volumes, this means fewer retail participants, reducing overall risk, and reducing the need for public intervention, and allowing some “room to breathe”. Chervinsky concluded. “In that sense, the short-term pain of a bear market can support long-term progress.”
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