Crypto developers should work with the SEC to find common ground

Developers, investors, and regulators can establish best practices and improve the quality of cryptocurrency development by working together.< /p> Opinion

Regulators are charged with striking a balance between protecting consumers and creating environments in which entrepreneurs and the private sector can thrive. When markets face distortions, perhaps due to an externality or information asymmetry, regulation can play an important role.

But regulation can also stifle entrepreneurship and business creation, making society and its people worse off. The United States Securities and Exchange Commission has been particularly hostile towards cryptocurrency businesses and entrepreneurs. For example, SEC Chairman Gary Gensler noted that he views Bitcoin (BTC) as a commodity, but many other "cryptographic financial assets have the key attributes of a security".

He reiterated this line in a bombastic Aug. 19 op-ed for The Wall Street Journal, saying that "you can substitute 'crypto' for any other asset" when talking about securities regulation.

But rather than “regulate by editorial,” as some crypto enthusiasts have phrased it, a better strategy would be for developers, investors, and regulatory agencies — like the SEC — to work together at least around common standards that can increase the overall quality of projects and establish best practices that the entire community of Web3 participants will benefit from.

Related: SEC Reportedly Launches Insider Trading Investigation

“Regulators are effective when they are also in the trenches with industry innovators and builders,” Corey Wilton, co-founder of Mirai Labs, told Cointelegraph.

This means that there must be an open and free dialogue between the regulator...