Crypto — Enabling Legislation
It’s natural for other countries to see the mistakes China is making in restricting the use and mining of Bitcoin. Then see the US potentially strangling, in the crib, the most innovative technology since the internet. Most countries, wisely, want to welcome the crypto community to their shores.
At our annual Ravencoin Meetup at Sea, we discussed options and the best advice we could provide for crypto legislation.
The key is “enabling” legislation.
What does this mean? Ask yourself if the new legislation is friendly and clears a path. Most legislation adds guard rails. Enabling legislation tears them down and opens up the freedom to operate and innovate. This works well if there are already some basic anti-fraud laws. We don’t want fraud, but we do want innovation.
Crypto opens up so many areas for innovation. It is like the computer, networking, or internet being invented. The US is going overboard trying to protect its financial exorbitant privilege and is hampering innovation. When you see exchanges blocking US citizens from participating in swapping assets, it isn’t because the exchange doesn’t want to have US citizens as customers. It is because the long arm of the US Federal government has exceeded its US Constitutional authority and acts as a parent of a two-year-old. “Don’t touch that, it’s hot!”
If you are working with your government on how to craft or fix legislation to attract crypto talent and treasure, make sure that legislation is enabling.
In general, opening up possibilities (“enabling “) will include the word “may”, or “can” while restricting legislation will include words like “shall” or “must”
Here are a few examples to help clarify the idea:
Enabling:
Exchanges may accept cryptocurrency for settlement.
Not enabling:
Senders of digital assets must have a broker license.
Enabling:
Blockchain assets may be used in lieu of certificated shares of a company.
Not Enabling
Securities must trade on an exchange approved by the government or licensing division of …
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You get the idea. Are the new laws opening up and welcoming creativity and new possibilities? Or, are they trying to preemptively rein in the power of the technology before we explore its potential to lift others out of poverty, democratize access, improve capital deployment, globalize commerce, disinter-mediate rent-seekers, and many other untapped possibilities?
If you are involved in updating your rules, laws, or regulations, always opt for the enabling wording to attract talent to your jurisdiction. Talent and innovation will flow naturally to where it is welcomed.