How far will regulation stretch?

Every day we see regulators cracking down harder on crypto, all in the name of stopping money laundering and other shady stuff. This ends up putting crypto in a position where it's seen as "safe" enough for regular folks and investors to jump in and trade assets. But the more control they have, the less freedom we're gonna have. They're going after centralized mixers and now they're holding developers of privacy protocols responsible for what they create. It makes me think, how far are they really gonna take this? Are we gonna hit a point where you can't even launch a new crypto without getting the green light from regulators (like the government)? If someone decides to create their own crypto or token and puts it out there without government approval, could they end up facing fines or even jail time? What do you guys think about all this?

Digital assets to the tax man is a property and commodity, the crypto regulation policies hardens by minutes, countries, Canada, UK, US, etc adds regulation to stable coins for money laundry purposes. Yes, expect that time to become, a bill is there that asks stable coin issuers to present an equivalent asset or money to cover for the number of coin in distribution. the time is very close for other coins, to underpass a similar strict law. [quote

Maybe they will go that far. BTW, in the case of people launching coins or tokens with malicious intent, I think I'll side with the regulator. We've seen firsthand how those fake developers have made people skeptical of crypto as a whole. The mixer shutdown was also motivated by the many illegal activities, they became ink in clear water. IMO, regulators will not venture into areas they shouldn't be in, they will simply carry out their duties as enforcers of justice, that's all I've in mind.

Everyone of us are not investing because of the condition of crypto being regulated by the government or their institution, a typical reason to this is when you made any mistake to go to your asset hacked or being scammed, the same regulators will definitely fail you because they cannot help with the situation towards recovering back your assets to you, so all they do is only to fight for their own personal interest and not the general interest.

I hope that they get into that point, we've got so much cryptos already that anyone can make it. And so if a regulator is requiring that for any developer, this can also reduce the rampant scams that are happening through new projects. That's one of the advantage that we might get if they get to that point. Since the privacy we're getting is also reduced, we might just get some incentives like that to lessen the victims falling for the projects that have the intent to scam.

Imho there is just not one ideology when it comes to regulations... There are several different political standpoints and any side could win, even the dumb uniformed side. I don't get this attack against protocols, like open sourced code could be illegal. It's like saying that linux and python should be illegal because hackers (or crackers) are using them. Mostly all parties agree that we need to do something about money laundering, and that we need some sort of auditability to enforce accountability. Let's remember that when we are talking about launching cryptos, then seeking people to fund crypto projects, is very different from having a fair launch on some PoW coin.

I personally believe that the launch of any new cryptocurrency should not require government approval. Regulators should not adopt such a strict stance that they feel compelled to impose such requirements so that they can still benefit from cryptocurrencies and even the same goes for crypto enthusiasts. Rules that stifle the freedom of crypto enthusiasts will only have a negative impact on future crypto innovation. And new innovations may no longer emerge due to the strictness of regulations that require prior approval like that. The government only needs to regulate crypto in the context of misuse. And I think innovation should not be hindered. Some of the innovative cryptos that exist today are the result of the ease of launching new cryptos without regulatory approval for its launches. Regulators simply need to clarify their regulations so that developers only need to ensure they are not breaking the rules.

That's true. There are so many "shitcoins" out there in the market. Regulating who will launch new crypto assets would help minimize fraud on the market. While it's good in the sense that it helps keep things "under control", it also goes against the "permission-less" nature of crypto/Blockchain tech. If governments require developers to comply with KYC to launch their very own cryptocurrency, the community might "fight back" by supporting anonymous developers working on crypto projects with freedom in mind. Regulators have gone far since Bitcoin came into inception some time ago. So I'd not be surprised if they come up with new ways to limit privacy and freedom for everyone. We'll see what happens in the long run.

Regulators will probably keep tightening rules, but they can't fully stop people from making new coins becase anyone can still publish code and launch a blockchain. What they really control more is where crypto meets normal finance, like exchanges, fundraising and companies behind projects. Thats why privacy tool developers now getting more pressure than before. I think bigger problem is small developers may stop building because legal issues become too risky, while big projects with money for lawyers can still continue easy. So no, governments probably cant fully block new crypto, but they can make launching it publicly much harder for normal people.

You have made a good valid point, in one way or the another, Government will always have to regulate cryptocurrencies, because every government wants to have control of the activities of anything that have to do with money dealing, and because of that reason people will not stop investing in cryptocurrencies most especially Bitcoin, likewise myself I will keep investing and buying and holding bitcoin, probably if you get scammed while dealing with cryptocurrency then most times this same government can’t absolutely do anything about it because they’re only interested on their own interests.

I want to disagree with you a little on the aspect that regulators makes crypto safer to use. There is nothing like that because all the things they accuse cryptocurrency of is happening in fiat system. Most money laundering, terrorism finances, human trafficking, illicit drugs and all the terrible things they attach to cryptocurrency are happening in fiat system that is heavily regulated. If that be the case, then it becomes obvious that regulation does not solve much problems.

They'll keep pushing until they hit either a legal wall, a technical wall, or the usual political wall where enforcement starts costing more than the problem they claim to solve. What I don't think happens is some clean final state where governments "control crypto" in the neat way people imagine. They can absolutely crush the easy onramps, the public company side, the hosted wallet side, the stablecoin side, the app store side, the banking side, and the fully doxxed team launching token #9374 with a roadmap and a cartoon mascot.

Feels like they’re just gonna keep tightening things step by step. More KYC, less privacy stuff, more pressure on exchanges. I don’t think they can fully stop people from launching coins though, anyone can still deploy one. What they really control is access. Listings, fiat ramps, big platforms. So crypto won’t die, it’ll just split. One clean and regulated, the other more underground.

Regulators can make it harder for stuff to hit big exchanges or get fiat on/off ramps, but the code itself? nobody can really stop that. Small devs might struggle with legal headaches, but someone somewhere will always launch a new coin. The space just keeps splitting, some projects play by the rules, others stay more underground. Honestly the real risk is people panicking and selling too early because of all the news, not that crypto disappears.

I can't think of a reason why regulating new projects might negatively impact the crypto innovation. Regulators will not stop or restrict you from launching a new crypto if it has the potential and if it matches the legal guidelines. Yes, it might be a bit time consuming to get approvals from these regulators, but it will bring more credibility to that specific project and number of people will chose investing in that project just because it has been approved by the regulators. Just getting the approval might not be sufficient as these projects will have to comply with the legal framework and will have to submit their files for monthly or quarterly audits. It might increase the headache for the founder but will eradicate loss for people like us. I think it might take years before they can regulate the new launches. Their current target is to centralize the current framework and regulate the coins which are circulating in the markets currently. Regulating new coins will be their secondary choice as of now so I think this is the right time for founders to launch new coins if they want to avoid the legal hustle coming forward shortly.

You do have a point there, mate. Things are worse in the Fiat world. Without regulations, it would be the "wild west" in crypto land. At least, regulators have been able to minimize the number of malicious actors (scammers) on the industry. I mean, criminal activity is still on-going. But at a lesser degree than before. With crypto being "legalized", serious investors won't think twice before "parking" their money in crypto. Especially, institutional investors. The door is wide open for "Wall Street" to further expand crypto's legitimate use cases in the real world. Regulations need to be "balanced", otherwise they would stifle the growth of the industry. I know that governments will find new ways to prevent people from obtaining true financial freedom and privacy with crypto. But if the community comes at the defense of decentralization, nothing should be able to stand on our way. One can only hope things don't get worse in the long run.

Crypto is decentralized, so I doubt such thing could even happen. We have meme coin plague in solana exactly because the blockchain is permissionless. On the other hand regulator are already regulating exchanges strictly that every new token listing needs to adhere to the regulation, they are actually already in control and whatever they want to do next is just a nail in the coffin.

Regulators can't stop new coins from emerging due to the permission-less nature of the Blockchain. But they can control which coins get listed in an exchange and which ones don't. This is more than enough to restrict or limit the number of illicit actors (scammers) on the Blockchain. Regulators can even go one step further by requiring developers to disclose their identities by complying with KYC. Like not being able to create or launch a crypto project anonymously, as it could lead to fines and/or jail time. Governments might do such a thing to try to stifle the crypto of growth. Especially if they begin to see crypto overtaking Fiat's dominance. For what I know, anything's possible in the future. Better be prepared for the worse, just in case.

Governments with all the regulator bodies can enforce their conditions on regulated services only, but not on individuals willing to hold a privacy token or lunch a new project in the blockchain. As you have already mentioned, the best they can do is to monitor the activity of the exchange platforms that are running under an activity license to delist any privacy coin, and to go after unregulated services like DEXs and mixers. Despite all the restrictions and limitations imposed by regulators, mixers are still there with some DEXs and NO KYC services running smoothly, in addition to the continious emerging of new privacy projects. I found this recent published article about how lawmakers worldwide working to introduce measures under the pretext of to combat crypto crime while they are indeed fighting privacy: https://www.compliancecorylated.com/news/lawmakers-worldwide-introduce-measures-to-combat-crypto-crime/

Of course. But we cannot underestimate what regulators can do. Because they can go to great lengths to try to keep crypto under their grasp. Perhaps, they will require DEX developers to make their platforms regulatory-compliant. Or require developers themselves to disclose their identities to the public before launching their own project. Crypto/Blockchain tech may be permission-less, but developers are forced to follow the law if they want to stay in the game. Else, they would face fines and/or jail time. That's the way this works. At least, not all countries will have strict regulations against crypto. Some will have flexible regulations, allowing you to "freely" buy/sell or even use crypto without fear of imprisonment. Laws are changing all of the time, so things might be different in the future.