All Financial Wisdom

The Central Banks are not Regulating Bitcoin and We Explain Why(pt 2)

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continued from part 1

The fact is that the most daring writers can afford to take the risk of dedicating (in honor of their readers) an analysis of the future that is coming, since what I expose myself to can be completely wrong. But my words have relatively little impact. But for the SEC, for example, to regulate about the future and be wrong has much more serious consequences than a wrong analysis. And the regulators and the Central Banks know this.

No regulation is perfect, but bad regulation can be infinitely worse than an absence of it. That is one of the maxims that regulators often follow. And we say that it is infinitely worse because what it would surely mean is, on the one hand, not being able to have mitigated or avoided the socio-economic risks for which such regulation had been precisely designed.

And if this were not enough, in addition, bad regulation can seriously endanger an incipient sector that is defining its future and is still very vulnerable to exogenous factors. This also, precisely in a sector of the future, can end up putting the country in a serious competitive constraint against countries that have effectively regulated at the right time.

And what can be done before it is too late?

You already know that we always try to bring you solutions as well as possible, and this time will not be different. The solution to the complex equation of which I spoke before is neither more nor less to effectively add a real number and a complex number, together which will give a solution.

And the solution to the problem of the learning curve of regulators and Central Banks comes hand in hand with that socioeconomic issue of which I have spoken to you on so many other occasions: it is in the hybrid disciplines in which I always tell you that the future is more promising and challenging. 

We have then that the regulators and the Central Banks can not bury their heads under the ground before the exponential of the progress that is coming upon them. These institutions do not escape this time either from the need to continually reinvent themselves, which for a few decades, has profoundly affected the economic sectors and companies whose activity they regulate. These institutions must be redesigned from top to bottom, and they must become more open institutions and count on external collaborations with the crypto-sector (and what may come in the future). The objective is to accelerate the learning curve of these institutions, and to have the support of experts who know the crypto-economy and its implications.

But of course, not everything is that simple. This solution also presents (big) complications, and these are that this collaboration must strictly stick to that: a collaboration. It is the duty of the professionals of the institutions to assume their role in the fullest sense and to count on these collaborations, always receiving them with a critical spirit. The reason is none other than that, if the industry is the one that makes its own regulation, we can already guess how things will end.

The regulators and the Central Banks thus become even more key institutions, and they will need the best professionals, with an extraordinary capacity for learning, a large dose of objectivity, exceptional professionalism, and above all, a lot of anticipation and creativity. The management of human resources also becomes key for these institutions.

But the future is exciting today for the Central Banks, and, by its “Central” influence (never better said) in the real and virtual economy, also by extension for all other agents and socioeconomic sectors (which was already ). The issue is that the crypto-economy is increasingly inflated, and its influence on the real economy is increasing. In parallel, the technology develops more and more new applications and protocols, whose real socio-economic impact is still unknown at the moment they are already adopted.

The key axis in this graph is the temporary, since what should take away the dream (us and the regulators and Central Banks) is whether the regulation of the crypto-economy will arrive before it is too late. The risk is that the regulation comes when there is already a massive and unstable selloff (some argue that it’s already happened), whose demolition would also have very damaging consequences, and then there would be no good solution.

Once again, the future is exciting (or threatening, depending on how you look at it), and the dose of passion of that future is exactly the same that leads us to adopt new technologies and disruptions that are changing our lives. Pure and hard socioeconomics gentlemen. Theories that quickly become realities, and realities that become virtual. That is the true future that awaits us all, whether we want it or not. Better be prepared for what is coming.

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