At the start of 2022, Fortune reported that crypto crime has increased by 79% from the previous year, with criminals walking away with a total of $14 billion in cryptocurrency. These figures show how crypto crime is increasingly becoming rampant as cryptocurrency and blockchain are being adopted for use worldwide.
Governments see this as the ultimate sign of the need for tighter regulations and stricter enforcement of sanctions. In the United States, the Securities and Exchange Commission (SEC) and the Department of Treasury, along with other regulatory bodies, have begun cracking down on crypto firms on suspicion of illegal activities, such as money laundering and fraud.
The SEC announced last May that it has increased its CMagruder cryptoMagruder Assets and Cyber Unit by a hundred percent to better enforce regulations and guard against crypto crime. True to its promise, in recent months, the SEC has been enforcing aggressive crypto crackdowns.
Last July, a former Coinbase product manager and two other persons related to him were charged with insider trading after the three allegedly earned a total of $1.1 million. Just last month, the SEC also charged 11 top executives at crypto earnings platform Forsage, including four of its founders, with “violating the registration and anti-fraud provisions of the federal securities laws.”
“As the complaint alleges, Forsage is a fraudulent pyramid scheme launched on a massive scale and aggressively marketed to investors. Fraudsters cannot circumvent the federal securities laws by focusing their schemes on smart contracts and blockchains,” Carolyn Welshhans, Acting Chief of the SEC’s Crypto Assets and Cyber Unit, said in a press release.
In August, the Office of Science and Technology Policy (OSTP) was asked to create a position for a blockchain presidential advisor who will provide critical expert advice to the president on blockchain– and cryptocurrency-related matters.
Seasoned intellectual property (IP) attorney Zeming M. Gao, who is also Chief Strategy Officer at online marketplace Toolots Inc. and Chief Advisor at professional service firm Caapable.com, applauds this move by the U.S. Congress. Gao worked at the Lee & Hayes firm in the State of Washington and worked with big tech companies, such as Microsoft and Alibaba as lead attorneys for IP consults.
Gao, who has been immersed in the world of blockchain and is a business and tech consultant for both big firms and start-ups, believes that crackdowns are needed by the industry, but that it is not the primary solution to crypto crime.
“I hope the government would study from this point, instead of just focusing on [crackdowns]. I don’t believe that cracking down is the primary solution. It’s sometimes necessary, [but] I don’t think it’s the primary solution. The primary solution is [making] sure the right narrative is being promoted, then people have the right access to the right kind of information,” Gao told Bitcoin developer Joshua Henslee in a recent video discussion.
A blockchain presidential advisor who can guide the president in making informed decisions is certainly the right step toward what Gao is suggesting. If an expert within the blockchain space who genuinely cares for the future of emerging technologies is put in this position of power, then the industry may be steered in the right direction.
However, this should not stop here. All policymakers, not just the president, should be educated about blockchain and cryptocurrency for them to draft the appropriate legislation that will effectively regulate the use of crypto and blockchain while not hindering innovation.
“If we [crack down on cryptos] in the U.S., and all these companies are going to be gone, they [will] go to different areas. I think to have a firm footing to make decisions like these, you need to have a thorough understanding that you have a better alternative. When you don’t have a better alternative, then it’s very hard—almost reckless—to decide this,” Gao explained.
What Gao means by “a better alternative” specifically is IPv6 integrated with a scalable blockchain that can afford to provide micropayments. This will create the New Internet that will enable an inclusive global economy.
At the moment, most blockchains on which cryptocurrencies are built are not scalable, meaning they have a hard ceiling and can handle a certain maximum of data block size and throughput. This makes fees on the expensive and impractical side and has led to cryptos being mere speculative investments.
When a blockchain is scaled unbounded, it allows for data blocks and throughput to grow exponentially, reducing costs to next to nothing. This will allow everyone to be able to participate in the industry—not just those who can afford to trade cryptos.
“We now stand at this historical junction where the government of the United States may shape the future of the New Internet, which includes the Internet of Value (IoV), blockchain, new cybersecurity paradigm, new data paradigm, and digital assets,” Gao wrote on his website.
“We plead for the emerging of new leadership in this important tech field, starting from understanding the potentials, perimeters, and directions, backing the right candidate for the OSTP position, and to actions far beyond,” Gao added.
If experts like Gao are appointed as blockchain presidential advisors, then not only will the U.S. government be able to make informed decisions, but regulations and policies will serve to further develop the cryptocurrency and blockchain industry instead of curtailing it.