How much enforcement is too much? – Cointelegraph Magazine

Many blockchain companies now believe that regulation is inevitable, but there’s a growing debate over where to draw the line between protecting users and strangling the lifeblood out of the industry — or forcing it outside the United States. 

“Whether we like it or not, regulation is coming,” Sheila Warren of the Crypto Council for Innovation tells me during an interview in the lead up to the recent Collision conference in Toronto, Canada.

The CEO of the industry lobby group for blockchain technology explains that rather than trying to stop the inevitable, many companies are now focused on lobbying for rules that work for them instead.

Why the change? With every week seeming to bring new stories of loopholes, hacks and algo stablecoin failures — from the popular Netflix QuadrigaCX documentary to the dizzying world of crypto transaction mixers and the steps law enforcement used to track two Americans accused of selling fraudulent NFTs — increased regulation is starting to look like a better idea. And not just for businesses but also for legislators worried about being reelected. People seem to love hearing about crypto scams and lost money… as long as it’s not their own.

Even if regulation is inevitable, the question of how and what to regulate is still controversial. Specifically, what type of regulations and enforcement will actually help keep the industry fair and safe for participants without killing the unique and revolutionary aspects of blockchain, or turning it into another version of traditional finance?

Does regulation mean clarifying the 38 different considerations for the four factors that define a U.S. security? How about defining who owns what rights in NFTs? Or maybe it simply means following Wyoming’s example and regulating DAOs?

Walking the line

A week later at Collision itself — a 35,000-person tech who’s-who in Ontario — I plop myself down on a chair in the dark area in front of the “crypto stage” for a discussion with Ripple CEO Brad Garlinghouse about how to regulate cryptocurrencies.

Ironically, staring me in the face are a hundred or so branded seat covers sporting an eye-popping white-on-black Crypto.com logo, despite the fact that Crypto.com isn’t registered to operate as a crypto asset trading platform in…