Why hasn't the US government regulated crypto yet?
This is a fascinating question,
and it's hard to get a concrete answer
(but there are many theories in this post).
We do know a few things we that can cross out as reasons.
1 - It's not that the SEC doesn't understand crypto. SEC chairman Gary Gensler taught blockchain at MIT. To assume he doesn't get crypto is laughable
2 - It's not that the don't have time or resources. The US government has an unlimited budget for things they deem important.
3 - The industry WANTS regulation. Why? because when the rules are clear, it's easy to map out a pathway that protects everyone involved from breaking the rules.
However, when the rules are NOT clear, it creates fear and worry about doing the wrong thing so innovation is slowed down in may instances.
4 - Without regulation, groups like the SEC can selectively pick who to persecute. They can exercise discretion which gives them power that the Constitution did not grant them.
As US citizens we don't want a powerful SEC who can pick and choose which crypto ventures to interfere with.
If you dig deep into the Ripple / XRP and Ethereum saga you will see what I mean.
***
Fortunately, regulation within crypto is coming.
While the rules may have an adverse impact on some projects, CLARITY is desperately needed.
Here is what I would look out for to come with regulation.
1 - The SEC / Ripple case is very important. This will determine if XRP (and other similar crypto currencies) are securities or currencies. Regulations are different for each, so this clarification is huge.
2 - Stablecoins are a multi-trillion dollar sector within crypto. If you understand the role that lobbyists play in government policy, you can see that large influential financial institutions will use their powers over politicians to make this a walled garden.
Only select institutions (they will call this "licensed institutions") will be legally allowed to issue stable coins
(this is my prediction - I may be wrong)
3 - Many NFTs will become securities. This means there will be rules around who can buy and sell certain NFTs.
It's hard to make the case that an NFT is a currency, as there is usually an expectation of profit, and there is literally a contract from the seller to the buyer.
NFTs that sell land are very similar to the court case 100 years ago that defined the "Howie Test" used to determine what is a security and what is not.
4 - There will be a push to only allow crypto investing for "Accredited Investors".
This has already happened with DeFi service Celcius.
Accredited investors have a network over $1M (excluding your home) or an income over $200K (rules vary by country, those are for US)
We will likely have to see a big crash before that push (don't let the media tell you that crash happens randomly or by accident).
That will make it necessary for the SEC to protect innocent investors from the risks of crypto.
What it will really do is make the financial opportunities currently available to everyone only accessible by people who are already well off.
You may question if the SEC really has ill motives towards retail investors, so I would challenge you to find one example where they created or advocated policy that helps retail investors at the expense of institutional investors. I'll wait.
***
TL;DR - crypto regulations are coming.
we will get clarity but some parts of crypto will face challenging rules.
but as a whole the industry can grow faster because it will be clear what is legally ok, and what is not.
Don't believe the lie that the regulations are there to help retail investors. if that was really the intent, the rules would have been put in place years ago.