How might blockchain regulations evolve in the future?
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You also have to consider that one of the fundamental tenets of Bitcoin was self accountability: You are responsible for your own money. You are your own bank. Consumers in a mass market won’t want that, they’ll want someone to keep track of it for them.
Exactly, that’s what we're seeing in those centralized exchanges now. I don't have to go to PancakeSwap all the time to get XYZ coin, I can go straight to Crypto.com, Coinbase or wherever else they will manage it for me. That way I have a bit of assurance that they will protect me if I lose a couple Bitcoin and the risk of me holding my own wallet on my crypto tag is mitigated or minimized. <br><br>We're seeing the pendulum swing. We’re moving away from the decentralized model that Satoshi talked about, where you could be your own purveyor of funds, but it might be for the better. We're seeing more and more good use cases for why a centralized exchange may be worthwhile, because people are screwing up and sending funds to scammers left, right and center. People are losing thousands and even millions in some cases.
Right now, if you leave the US to go to India and you have $20K USD, you have to declare it. A friend told me that at some senior levels in government, they were considering a mandate in which you would have to declare any cryptocurrency you move across international borders. The thinking is that if you know the key, then you're technically moving money. It was a cool conversation to be a part of, but it's terrifying to think that you could be guilty of money laundering just because you had your 24-word passphrase memorized while you traveled between countries and didn't declare all of your Bitcoin assets.
That is definite over-reach but I'm sure those conversations are going on, even around the new legislation that's emerging for unrealized versus realized gains and taxing cryptocurrency.
Everyone's going to have all sorts of losses on Chinese Exchanges that crashed over last year. That's where we are. It's crazy that we were there in 2021, but we're playing that game again in 2022.
Crypto.com is becoming one of the main organizations bringing crypto to the mainstream. They bought the Staples Center and renamed it the Crypto.com Arena. In their model, over 95% of funds are kept in cold storage. They recently had a report of suspicious activity in which a lot of people lost funds. The details weren’t released but 2FA was enabled. Some hackers managed to transfer out money, but Crypto.com covered everything and everybody got their funds back. I don't know what the scale was, but they have about $500M worth of insurance to cover all these incidentals. So the question is, how does that play into the technology space in terms of insurable losses, and what kind of controls can be put in place to make sure accidents don't happen? These are part of the growing pains of a new technology. Now that we’ve discovered problems, what controls can we put in place to solve them?