The Department of Justice's (DoJ) recent decision to effectively disband the National Cryptocurrency Enforcement Team (NCET) isn't a setback. It's a necessary course correction. It's not about letting criminals run wild. It's about recognizing that innovation thrives in sunlight, not under the suffocating blanket of regulatory overreach. Think of it as similar to pruning a rose bush. Occasionally, you need to prune deeply in order to encourage healthier, more vigorous development.
Innovation Needs Room To Breathe
Why choke a new industry with regulations meant for a world that does not exist, and frankly, never will again? The internet thrived not because bureaucrats bureaucratically determined everything it would ever do. It flourished because the private sector enjoyed the flexibility and autonomy to innovate, create, and yes, even crash and burn. Crypto deserves the same chance.
The prior approach was “regulation by prosecution.” That's not justice; it's a shakedown. It uses the threat of legal action to force them into line. Secondly, these rules are rather nebulous, poorly defined and in the end deleterious to innovation.
Consider the car industry. Imagine if, from the very first Model T, the government had imposed a mountain of regulations based on horse-drawn carriages. Would we even have the robust automotive industry we’ve got today? Absolutely not. We’d all still be using fancier buggies. Only the most intrepid would-be innovators would risk improvement in their garages, fearful of attracting the ire of trigger-happy regulators. Crypto is no different.
Individual Responsibility Matters Most
We’ve turned our society into a safety net society, insatiably asking that government shield us from all hazards. But where does it end? At what point do we respect adult self-determination and choice? Often those choices can lead to undesired or unlucky outcomes, but they should still have the liberty to make the choice themselves.
Crypto investing is inherently risky. It’s exciting, it’s dynamic and it’s fraught with opportunity and landmines. That’s also what makes it exciting. That’s the stuff that draws the entrepreneurs, the innovators, and the investors who are willing to roll the dice on something new.
The DoJ’s change in course indicates a long overdue return to the principle of individual responsibility. This is not intended to be investment advice and investors should conduct their own diligence. They need to understand the risks involved. If they do get burned, then let them learn from their mistakes. They must not be allowed to come running, whining to the taxpayer for a correction bailout.
Of course, that’s not meant to imply that fraud should be overlooked. Absolutely not. For criminals who prey on unsuspecting investors, they need to be prosecuted to the full extent of justice. That's already the DoJ's job. They shouldn’t require a new “crypto enforcement team” to accomplish that. They simply have to use existing laws in a common-sense fashion when it comes to emerging new technologies.
Overregulation Drives Innovation Offshore
Think about it. If the US goes the way of being overly hostile to crypto innovation, where will these crypto businesses find home? They’ll take their talents to countries with much more open arms. Those are the countries that are wise to the fact that innovation drives economic growth. Nations unafraid to bet on what’s next.
Do we truly want to abdicate leadership in this pivotal advanced industry to foreign countries? After all, do we truly want to watch billions of dollars in investment walk out the door? With it goes jobs, chance and opportunity too. I certainly don't.
The SEC’s recent establishment of a “Cyber and Emerging Technologies Unit” is an alarming indicator. Though ostensibly intended to protect investors, it may just as easily turn into another weapon against innovation. We can’t get it without regulators who really understand the technology. Instead, Congress should be interested in working proactively with the industry and aimed at encouraging innovation rather than designing obstacles.
Trump’s initiatives— like the new presidential working group and the “Strategic Bitcoin Reserve” —are definitely a good start. They signal a recognition that digital assets are here to stay and that the US needs to be a leader in this space.
As welcome as the DoJ’s decision to junk the NCET is, it’s a courageous decision. It’s a risk, sure, but it’s a risk we should take. We need to focus on new ideas and support risk-taking by creative entrepreneurs. A future where the US loses out in the digital revolution is not an option at all. We can only hope that we are indeed entering a new, more reasonable era of regulation. With these changes, we can unlock the full potential of crypto and cryptocurrency to create a more prosperous future for all Americans.
