Uniswap Under Investigation? Government Can't Stop Crypto

People die, code lives forever

Looks like US regulators started to investigate Uniswap.

What for?

Not sure. As best I can tell, US regulators asked Uniswap to tell them how it works, how they market it, and what people do with it.

While that’s a good place to start an enforcement action, let’s not get ahead of ourselves. In my day job, I work for the US government (but not the SEC). Government regulators investigate a lot of things—that doesn’t mean they plan to charge anybody with a crime.

Governments can’t stop this train (yet)

Does it really matter, anyway?

If history is our guide, the investigation will take a year or two (maybe longer) and may not result in any charges or fines. Even if the investigation results in charges or fines, life will go on. Uniswap is code—you can’t stop it. Anybody can use it or develop on it. The genie’s out of the bottle.

Cryptocurrencies run on public, permissionless networks that use open-source protocols with no point of control or failure. You can put their creators in jail, fine them, or exile them. You can’t stop somebody else from developing on the code, forking it, rebranding it, or doing whatever else they want with it.

With more than 7 billion potential developers able to do that from anywhere in the world, it’s hard to see how governments can stop this industry from growing.

China kicked out miners and banned crypto for the zillionth time. Turkey banned crypto payments. Nigeria banned conversions of fiat to crypto. Qatar, Bangladesh, Ecuador, and many other countries banned all crypto.

Yet, the technology persists. More than that, it flourishes.

Keep in mind, Binance runs a $500 billion company without a headquarters or regulatory jurisdiction. In some parts of the world, you can’t even do business with them. Financial institutions severed ties with the platform en masse earlier this year. Still, they grow.

Basel 3 jacked up reserve requirements for banks dealing in crypto. That may sound bad, but I’m certain the banks will happily comply if they can make enough money offering crypto-related services.

And you’re worried about governments?

But the US government is so powerful and organized

In my 20s, I worked in Congress and lobbied for a Fortune 500 company. Now, I’m a civil servant.

I can assure you, the US government isn’t as powerful or organized as you think. It’s a complicated beast.

Every legislative concept goes thru many twists and turns before it passes into law (if it ever does). Even then, it can take more twists and turns as bureaucrats figure out how to implement the laws.

And after all that, nobody knows how things will go. Often, Congress appropriates too little money to fund enforcement (sometimes, by design). Other times, US regulators don’t have enough staff or know-how to make the law work the way it’s supposed to. In a few cases, the laws are simply impossible to enforce or blocked by court action.

And each time the leadership changes, you never know what the new leader will care about.

Look at Congress, not regulators

We can’t do much about the regulators. The US political system limits our ability to influence the people who run the bureaucracy.

There are no such limits on our ability to influence Congress.

For every law that threatens to harm the growth of cryptocurrency, we have people working to fight it. Often, well-funded, well-connected, talented, hard-working people who know how to work the political system.

Who’s to say they can’t succeed? We have allies in Congress.

We also have public interest groups working on our behalf. You can even get involved with them. Here are a few big ones you may want to reach out to:

This too shall pass

Some fear governments will crush cryptocurrency. I’m not one of them.

Crypto is borderless, permissionless, and accessible to everybody, everywhere, all the time. All you need is a laptop or a mobile device and a little know-how.

There is no way for governments to stop that, and it will take years for the world to cobble together a regulatory framework that does anything to substantially change the technology or its usage.

BUT.

Over time, slowly, as whales and Wall Street acquire more of the market and users consolidate around a few on- and off-ramps, a few killer apps, and a few blockchains, governments will have an easier time controlling crypto. They will have fewer, clearer targets.

That will take years.

Until then, don’t stress about government, especially the US government.

Enjoy your freedom.


Mark Helfman publishes the Crypto is Easy newsletter. He is also the author of three books and a top bitcoin writer on Medium and Hacker Noon. Learn more about him in his bio.


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