Well-known billionaire Mark Cuban seems sceptical about the possibility of creating new regulations specifically for cryptocurrencies.
Cuban has already expressed his interest in cryptocurrencies many times, so he should not be considered as a rookie who speaks without knowledge.
His reasoning is simple, but straightforward.
Any discussion of crypto regulation has to start with the facts that there are already laws against fraud and that “crypto” is not monolithic. There are many layers to “crypto” here are my thoughts and all are subject to change as I learn more
— Mark Cuban (@mcuban) September 16, 2021
Any regulation of cryptocurrencies must start from two assumptions that make the very notion of “regulating cryptocurrencies” dubious.
According to Mark Cuban, the laws protecting cryptocurrency investors are already in place
Cuban points out that many anti-fraud laws already exist, suggesting that in many cases instead of imagining having to create new ones, one can simply use existing ones, or adapt them to these new assets.
The use of cryptocurrencies is not that different from other traditional assets, except that many of the tools with which they are used are decentralized.
Cuban calls for recognition of the fact that cryptocurrencies are not a “monolith”, but an ecosystem in which many new assets of a very different nature live.
It would therefore be completely wrong to treat Bitcoin and XRP as if they were the same thing, even from a legal point of view.
The former was created as a decentralized network that distributes tokens to miners, the latter was created by a private company that still owns more than half of the existing XRP tokens.
Cryptocurrencies and their categories
There are also huge differences between cryptocurrencies based on networks that enable complex smart contracts, such as Ethereum, or stablecoin tokens.
According to a definition provided by the Swiss Finma a few years ago, cryptocurrencies can be divided into at least three broad categories, namely payment tokens (such as Bitcoin), utility tokens and security tokens.
It would be completely wrong to attempt to regulate these three types in exactly the same way.
Cuban’s objections, despite the fact that he himself considers them only “thoughts subject to change as I learn more”, are real, concrete and above all profound, whereas it is by no means certain that those in charge of legislating the financial markets are aware of them.
The new chairman of the US SEC is certainly aware of these deep and complex features of the crypto world, but it is not the SEC that legislates in the US.
A number of prominent US politicians in recent years have shown little or no knowledge of the crypto industry, probably not enough to understand these innovations well enough to regulate them effectively.
It is possible that Mark Cuban is concerned and wanted to bring to light this problem related to the US legislator’s too superficial knowledge of cryptocurrencies.