Crypto is winning over the regulators
Dear Bankless Nation,
There’s never a dull week in crypto.
This week saw an indecisive EU Parliament dancing back and forth between a potential ban on proof-of-work (PoW).
Crypto markets held their breath as they awaited a major economic bloc to make up their mind.
When the vote finally took place, the PoW ban failed to pass: 32 MEPs voted against a minority of 24 who voted in favor.
That’s another week of great news for both crypto and Europe, but especially Europe.
At least 9.1% of Bitcoin’s hashrate comes from European miners. Despite Ethereum’s upcoming Merge and move towards a proof-of-stake consensus, an estimated 29% of Ethereum’s nodes are situated in European countries for now, with about half (51%) from Germany.
A continent-wide ban on proof-of-work mining would heavily hamstring crypto’s progress in the short-term.
More than that, it would also single-handedly gut Europe’s relevance in a fast-growing multi-trillion dollar industry.
Kudos to European lawmakers that know better than to undermine Europe’s already-declining economic competitiveness.
Dividing regulatory opinion
The EU’s divided vote tells us one thing: The regulatory tide against crypto is turning.
An emerging fracture within the Democrat Party sees legislators taking conflicting stances on whether the crypto industry serves as a force of good or bad, and whether to embrace its innovative force or take a heavy-handed regulatory approach.
In Asia, South Korea’s newly-elected president Yoon Suk-yeol campaigned on a crypto-friendly platform against a similar crypto-friendly opponent. Both candidates made promises to ease regulatory burdens on crypto companies.
Elsewhere in Europe, Ukraine’s celebrity president Volodymyr Zelenskyy signed into law Tuesday legalizing the use of crypto. This is hardly a surprise considering the Ukraine government received at least $55 million in donations from the global crypto community.
Compare that to the measly $60 million in humanitarian aid pledged by the world’s largest and oldest intergovernmental body, the United Nations.
Politicians are acknowledging crypto
Crypto is no longer a marginal interest on the libertarian fringe - it is a legitimate political coalition to be acknowledged.
3.8% of the world’s population (300 million) own some crypto. Countries that regulate it incorrectly risk giving up a share of the pie of wealth that everyone is vying for now.
That’s like losing your private keys to a Bitcoin investment you made five years ago.
Mainstream politicians are pivoting to crypto-friendly positions because they are waking up to the change in voter sentiment and the massive political profits they can reap.
That is a huge step forward for the legitimization of crypto. Class is in session and progressives, republicans, and centrists along the political aisle are finally paying attention.
The road ahead
Yet, well-earned as these victories may be, let’s take nothing for granted.
It was not that long ago that politicians touted fashionably anti-crypto talking points and be applauded on the back for it by crypto-illiterate voters.
Too many people still believe crypto is bad for the planet and a mere tool for criminals.
Too many users still misunderstand the decentralization ethos of Web3, and underestimate the perils of centralization.
There is still much work and user education to be done.
Even in the current state of regulatory limbo, the crypto industry is reportedly subject to extralegal harassment by the SEC.
These seemingly harmless “voluntary document requests” slow crypto innovation if builders have to err on the side of caution for fear of being caught in the crosshairs of undecided regulators.
Here’s what’s lined up for next week:
- Reddit co-founder Alexis Ohanian is hopping on the podcast. (early access)
- We’re spotlighting the Cosmos ecosystem in the newsletter.
- Sharing 5 things you need to know before you ape.
Have a stellar weekend.
- The Bankless Team