Sure, but that’s building a giant industry around the tech to make it explicitly NOT what it was designed to be, or what the ethos has been - secure, point to point electronic cash with no one telling you who you can transact with or what you can spend it on. Aka electronic cash.
No one needs a pile of paperwork to prove to the gov’t who they are to spend or get paid cash.
No one needs to be on a list, and have their every transaction double checked to make sure it’s with a validated counterparty to pay in or get paid cash.
Etc.
At that point, it’s literally cheaper, easier, and safer to just use a normal bank.
> Sure, but that’s building a giant industry around the tech to make it explicitly NOT what it was designed to be,
> No one needs a pile of paperwork to prove to the gov’t who they are to spend or get paid cash.
To be clear there's different types of regulations, some we/I personally agree with more than others.
Personally, I agree with you that kyc/aml laws are over the top. I think privacy and money laundering are two things people often conflate, and that privacy is something we should want. (Side tangent - the majority of crypto was not really designed for anonymity or privacy, although that's a whole different topic). People claiming "crypto is just for money laundering" as a reason it's bad should be applying the same logic to physical cash.
What I'm particularly interested in is regulations around the big exchanges to prevent them from putting all of their clients money somewhere stupid, losing it all, and go illiquid.
> At that point, it’s literally cheaper, easier, and safer to just use a normal bank.
I mean yes, an FDIC insured bank is absolutely safer than an unregulated crypto exchange. This is the exact reason why the phrase "not your keys, not your coins" exists, and why everyone says you shouldn't keep your keys on an exchange. Done properly, a crypto wallet should be safer than a bank provided you can assure physical safety and redundancy of your keys.
Part of the problem IMO is that crypto became this "get rich quick" thing - with "exchanges" advertising double digit returns, people using NFTs for art for some reason, etc. I think the technology has uses, but this "get rich quick" bs has been a massive hinderance. I really think this "the point of crypto is to make money" mentality is missing the actual use of it.
tl;dr - a properly used crypto wallet should be safer then a FDIC bank, an FDIC bank is faaar safer then a crypto exchange, there could be more regulation on just the exchanges, and aml/kyc laws are a seperate type of regulation - I was just using these as an example of the US government successfully regulating exchanges.
Well, one issue is it’s pretty hard to make money being a responsible custodian of cash, electronic or otherwise. It fundamentally doesn’t earn interest just sitting there, it’s a tempting target for thieves so you have to go through a lot of effort to protect it, etc. that’s true even if you’re just an exchange, and you only hold it for a day.
It’s a lot easier to make a lot of money if you steal it, or play games. Most of those are already illegal, no regulators required.
Regulation can help of course, if someone actually comes by and checks that nothing illegal going on. but the type of regulation that comes along with ‘have a reliable audit of what you’ve got every night, or else’ also tends to include ‘and make sure you don’t do business with drug lords and human traffickers’, at least in the West.
God help you if you try to fight that last one too.
Well, you can't mix identity regulations (that only add friction at this point indeed) with securities regulations that organisations should succumb to when dealing with clients' assets.
Right regulation right now would be to straight ban BTC in Europe because of the energy usage and CO2 emissions . And hopefully California could pass a right act during next elections and join the ban.
That just means there are powerful forces that can act against "what it was designed to be" for their own interests, whether it's the financial industry, government or both acting together.
It's not about pleading to these entities that they are "doing it wrong". They know this, because this is their way to control it / oppose "doing it right".
No one needs a pile of paperwork to prove to the gov’t who they are to spend or get paid cash.
No one needs to be on a list, and have their every transaction double checked to make sure it’s with a validated counterparty to pay in or get paid cash.
Etc.
At that point, it’s literally cheaper, easier, and safer to just use a normal bank.
Which is I guess the point.