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Comment by lern_too_spel | Hacker News Reader

That usage of these systems couldn't be regulated was a fantasy that crypto-scammers pushed on crytpo-suckers. Of course they can be regulated, and the SEC has some blame for not regulating it before so many suckers got cleaned out. The author is certainly wrong about the importance of blockchains.

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A centralized exchange is not a blockchain. Depositing dollars into Coinbase is similar to depositing dollars into PayPal. The company can and should be regulated as a legal entity in order to protect user's funds and minimize fraud.

Regulating a blockchain or smart contract is a harder matter.

Not at all. As long as you regulate the offramps to useful money via KYC, you can regulate the entire chain. That's what Chainalysis and kin are selling, perhaps not realizing that as soon as you regulate away the grift, the whole point of decentralized currency goes away.

This only regulates on and off ramps to CEX. Other situations like trying to force a decentralized stablecoin to block accounts or add regulation to an ownerless DEX protocol are harder to regulate. Privacy features like TornadoCash and Aztec could make it harder still.

In some of these cases the old laws do not fit well within new blockchain technological capabilities and how it is being used.

It's as simple as not allowing coins not traceable only to other KYC wallets to be converted into usable money.

This would only apply to centralized exchanges and intermediary payment processors. A user can still trustlessly and anonymously transfer 1 ETH or 1000 DAI to another person in exchange for some goods or services, as they would with a cash transfer under the table.

It is like asserting that marijuana could easily disappear if we just regulated it a little harder.

Normal people don't engage in financial crime when the alternative is easier, faster, and cheaper. The outcome would be that people who are already trafficking would add new financial crimes to their charges.

Most people using crypto - actually running nodes, creating contracts, and sending messages on the blockchain - prefer it to dealing with traditional bank transfers and completely opaque centralized systems. It is often faster, easier, and cheaper to send USDC than USD, and it is far more programmable and extensible to develop an ERC20 contract than hope for a Stripe SDK or Shopify plugin.

People will still use it even if the government attempts to cut it off entirely. Net result is that legitimate users will be treated as criminal, and/or will be forced to use broken banking infrastructure.

They prefer it to systems that follow money transfer regulations. As soon as USDC transfers follow money transfer regulations, they become more expensive and slower than tradfi money transfers because decentralization has a cost. Net result is that crypto is only better if you ignore the law. The problem for crypto-suckers and crypto-hucksters is that the law won't ignore them.

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