Government Crackdowns Are Coming Unless Crypto Acts First

From privacy standards to consumer protection, the cryptocurrency industry needs to better regulate itself before governments crack down.

Self-regulation will be key to governing the rapidly changing landscape of the cryptocurrency industry to preserve its autonomous and decentralized nature.

Months after the collapse of the Terra ecosystem that sent the crypto market capitalization below $1 trillion, the industry is beginning the long process of rebuilding not only retailer confidence, but also self-confidence. Current market conditions are partly due to structural weaknesses in smart contracts, models, and governance processes. This is evidenced by the many hacks and exploits that have taken place this year and the swelling of projects with faulty tokenomics and which are governed by dodgy operations.

The implementation of stricter self-regulatory standards will be necessary for the sector to build a sustainable and innovative alternative financial ecosystem. On the other hand, if the industry continues to ignore this problem, it is certain that external regulators will intervene strongly, forcing the new system to centralize in order to comply with the inherited rules.

Self-regulation in various forms has been successfully implemented in many sectors under government oversight, resulting in greater leniency in external regulation.

The advertising industry is a great example with its implementation of self-initiated standards to protect the privacy of user data. As the Internet industry grew in the 2000s, concerns began to emerge about third parties using user data without their consent. The Federal Trade Commission, a United States government agency, has proposed online privacy guidelines for the collection and use of...