The Adverse Selection of Crypto Regulation

Matt Levine: Facebook Inc. (now Meta Platforms Inc.) announced in 2019 with enormous fanfare that it was going to launch a stablecoin and work closely with all of the relevant regulators blah blah blah, and it went to the Federal Reserve and said “what do we need to do to launch a stablecoin,” and the Fed said “you must bring me the egg of a dragon and the tears of a unicorn,” and now the Facebook stablecoin is shutting down. One of the largest companies in the world devoted millions of dollars to figuring out how to launch a stablecoin and concluded that it was impossible. It is demonstrably not impossible! Tether did it! Tether has a hugely successful stablecoin! Tether does not care at all about working closely with all of the relevant regulators! That’s why!

…“The revolution needs rules,” some crypto guys say, and they get so many rules. “We don’t need to follow any rules,” some other crypto guys say, and they’re also right.

Matt’s point is that the SEC regulates serious, long-term players like Coinbase and Facebook out of business while the shady, fly-by-night operators run around unscathed until they rug pull.


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