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In the beginnings of Crypto, the «Wild West» space was called for its lack of regulation.
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We did not expect the «Wild West» Crypto to spread in the regulated world.
What we call «Crypto» today, began to take shape when launched Ethereum in 2015. Although there were other cryptocurrencies circling before: Litecoin, Dogecoin, Monero, etc.; Ethereum provided an infrastructure so that intelligent and cryptocurrency contracts could be launched without having to display a new network, which lowered the stick considerably for new Crypto projects.
Two years later we lived the ICO boom. The innovative proposal of the ICO (initial currency offer), whose name derives from IPO (initial public offering) was that they allowed new companies to capture financing and then “go over” in the exchange Crypto, with much less regulations than the market Traditional stock market. The public also had a much lighter access barrier than in traditional finances, so a large number of retail and amateur investors preferred to enter this type of markets. This formed a stock market with fewer regulations, which operated 24/7, and offered huge returns with high risk.
Although many well -intentioned projects were formed and financed with this ICO mechanism, a large majority were scams or projects that did not prosper. This generated debates both in the regulated and the wild west of Crypto. Was Crypto’s deregulation a problem or a goal? Has the Crypto space regulated? Were scams a lower collateral damage to the freedom provided by the Crypto world? Is it the responsibility of each one not to fall into scams or should the State take care of investors? Is it paternalistic to take care of investors and punish scam? Regulate the world Crypto will attract large capitals, winning millions to the small investors who arrived first? Was the regulation a lower collateral damage to the possible profits?
All these debates and positions regarding these and other similar questions continued during the following years, and continue to this day. However, the regulated world advanced a lot over the Crypto world: the exchanges began to apply KYC and AML, the different countries and jurisdictions created legislation and regulations for cryptoactive ones, companies quoted in the stock market began to accept and store cryptocurrencies and finally, as Crucial step in the change of narrative, Bitcoin ETFs were approved in 2024, followed by similar funds with other cryptocurrencies.
The wild west permeates stock markets
The majority notion today is that regulation is there, we like it or not. While some more radical Cypherpunks groups intend to recreate the entire financial apparatus in isolation and compete against the Fiat world, most Bitcoin and the most popular Crypto projects know that they must deal with the legal aspect in one way or another.
What was not so expected is that part of that spirit of wild west typical of the world Crypto will get infected in the world of regulated finances. I’m going to rely on three examples to illustrate what I mean. The first: FTX. The Exchange of Cryptos was founded in 2019, operated for a couple of years with a low profile and by 2021 it became the star of the sector, to be unmasked as a fraud in 2022. This could have happened as one more scam among many of the Sector, but the relevant case of the case are the close connections that this exchange had with US government officials.
The other two cases are less serious, but also paradigmatic. La Moneda $ Trump launched by the homonym president of the United States through two companies of his. Although it did not offer any return and was announced only as a «celebration», the price dynamics showed a classic Pump and Dump pattern.
The last of the cases is a bit more recent than the previous one: the fiasco of Argentine President Javier Milei promoting an obvious scam in his social networks. The latter is perhaps the most comic: the promotion appears to be a pure naivety of the president, and that he did not obtain any personal benefit or was involved in the project he promoted, but simply «believed it» just like any other amateur investor . Other sources indicate a previous relationship and possible cooperation between the company that launched the project and the Argentine president. If this were the case, it is also ridiculous that the president thought he could go out with his with such an obvious and shameless scam.
These three cases show us a non -planned dynamic of how Crypto attacks the the status quo. What we expected most was that Bitcoin and its blockchain technology enters competition with the traditional system and exceeds it, offering better benefits and greater transparency and efficiency. While this occurs, we do not foresee that the Crypto world could also Attack the system through reproducing in it the worst practices of deregulation.
The ease of creating chips that in seconds are traded all over the world, without going through validation processes; the lack of accountability by its issuers; and the naivety or malice of charismatic leaders of the political world are conjugated to leave exposed to a system that claims to protect the public, but mimics the practices that it claims to fight, with the aggravating fact of doing so from a position of authority and legitimacy.
At the moment we will have to work with the regulators, but We cannot trust them. Little by little, we must build a superior self -regulation, in which no privileged actor must enforce the norms and allow them to be saved. That was and remains the spirit of Bitcoin and its block chain.
Discharge of responsibility: The views and opinions expressed in this article belong to its author and do not necessarily reflect those of cryptootics. The author’s opinion is informatively and under no circumstances constitutes an investment recommendation or financial advice.