Scaramucci says blockchain and crypto need public support
Anthony Scaramucci, founder and co-managing partner of Skybridge Capital.
Jared Siskin/Patrick McMullan | Getty Images
You may not know this, but Goldilocks and the Three Bears is actually a story about the debate currently surrounding the regulation of the blockchain and crypto industries.
Some say there is too little regulation. Some say it’s too much. Some people think somewhere in the middle is just right.
But no one can agree on where that “somewhere” is, we argue about it for years, and Goldilocks takes to Twitter to threaten to move to another country where the soup is more to her taste.
Fortunately, “Too little, too much, or just right” is just one of many ways we can have a civil conversation about how to regulate this industry. And it happens to be a terribly simplistic one. A more nuanced framework that deserves much more attention than it gets: “Stop badly, support well”.
For a long time now, Gary Gensler’s SEC has been (de facto, not de jure) the most prominent and outspoken regulator of cryptocurrencies.
The agency nearly doubled the size of its crypto-asset enforcement unit last May. It demanded over a million dollars from Kim Kardashian for her role in pumping crypto last October (big score to anyone who had the foresight to put “SEC publishes press release with Kim K’s name in the headline” on their 2022 bingo card). It cracked down on Kraken’s betting program with a hefty (for Kraken) $30 million fine last month.
The fan base that cheers these moves isn’t exactly large.
Even from within, other commissioners – such as Hester Peirce – have publicly criticized the agency’s approach. Its tug-of-war with other agencies, including but not limited to the CFTC, continues despite President Biden’s call for harmony in his executive order on crypto last March. And, of course, industry leaders are happy to offer their two (non-interest-bearing, of course) cents.
Many in the crypto industry want this “regulation by enforcement” to stop. But as Alison Frankel of Reuters and former SEC Office of Internet Enforcement Chief John Reed Stark both suggested earlier this year, there’s probably no end in sight.
Why? Because this is what the SEC does best. Enforcement is in the DNA.
SEC is a weed killer. We can’t get mad at a weed killer for not growing fruit. At best, we can argue about what does or does not constitute a weed, and whether or not what was just sprayed should have been.
The approach the US federal government has taken to regulating this industry is a bit like spraying your entire garden with Weed B Gon (not an endorsement) and then waiting for the harvest.
This is precisely why “Too little, too much, just right” is not sufficient. But “Stop bad, support good” helps us realize that we are missing half the puzzle.
Well-designed government policy doesn’t just stop bad actors. It also promotes progress and prosperity. It is as much a trellis for good plants as it is a weed killer. That is what we have lost sight of.
Therefore, it can’t just be the SEC. We need a more holistic approach at the federal level.
That’s why we need to advocate for public-private partnerships like Abu Dhabi’s recently announced $2B initiative to support blockchain and Web3 startups or the legacy UNICEF Venture Fund launched in partnership with Giga to make crypto investments in early tech startups .
That is why we need to raise awareness of large grants that support research and education at the university level such as Ripple’s University Blockchain Research Initiative, the Wyoming Advanced Blockchain Lab made possible by a donation from IOHK at the University of Wyoming or the Algorand Foundation’s ACE program.
And that’s why we need government officials to balance the narrative, helping the American public see that it’s about keeping the baby as much as throwing out the bathwater—whether it’s making financial services inclusive and more frictionless, financing new and exciting applications of blockchain technology or simply supporting the spirit of American innovation.
Scaramucci is the founder and managing partner of SkyBridge, an alternative asset manager and SEC-registered investment advisor. The author’s firm, Skybridge, has several investments in cryptocurrencies, including the Algorand Foundation’s ALGO token, and crypto and blockchain-related companies, including Kraken.
