Anyone who's managed a company in the Bitcoin space can talk knowledgeably about regulation--usually meaning money transmittal regulations. Those rules are a core part of the fabric of the modern world, nascent but important until 9/11, then put into overdrive by The USA Patriot Act and aggressively enforced globally for a set of mostly good reasons since then (although see Charlie Stross' essay about the Four Horsemen for a counterpoint).

The crypto community in general has much less experience with the securities regulatory world, however, another much larger and more complex beast in the US. I predict that many companies and individuals around the world are likely to find out with rather breathtaking suddenness just how sophisticated, pervasive, and effective securities regulations are.

However. There is an obverse to this coin. Securities and Commodities regulators have NO IDEA how resistant the community will be to answering even basic questions like "where is the legal locus of this de novo asset class we wish to regulate?", or, frankly, how quickly this segment of the digital asset economy is going to grow.

What do I mean by “quickly”?

In 2010, I was an entrepreneur. A year before Mike Koss and I raised the first VC money for a Bitcoin business, I pitched a number of Bitcoin businesses to VCs on the west coast. The first pitch deck I can find in my archives is dated October 2010 or so. At the time, Bitcoin prices were hovering in the $0.20 range, making for a market cap of around $250,000 for all crypto assets in the world.

Today as I write almost exactly 7 years later, a conservative value for all issued crypto assets is around $130 billion, a growth rate of something like 650% per year, every year. And Goldman is testing the waters publicly around their cryptocurrency trading desk.

We're going to see this kind of growth in the token ecosystem, but faster.


I had the privilege of meeting Jennifer Shasky Calvery as part of the first group of Bitcoiners to speak with Financial Crimes Enforcement Network (FinCEN) and the Treasury department. She's an imposing figure--exceptionally smart and focused, usually carrying a gun, and she said something about Bitcoin I will never forget. "We think the toothpaste doesn't go back into the tube."

Personally, I like innovation. I believe over-regulation causes real harms. And I also know that it's impossible to put toothpaste back in the tube.

ERC20 tokens, and the innovations that come after them, are out of the tube. There will be many years of industry innovating, scheming, regulating, arguing, and unfortunately some scamming, as we all figure out how they can and should work--and we build the ‘social technology’ to use this new ‘information technology’ well.

But, they're here, people want them, and they will not fade away.

So what's Next?

At New Alchemy we talk internally about the idea of someone in Ghana having access to the Shanghai real estate market through tokens, all accessed through their phone.

Another example: we probably won't even know where our files are backed up in five years. Your computer could easily be autonomously getting bids for, and paying for, secure storage in a marketplace behind the scenes, all directly without your intervention.

In other words, the light I see at the end of this journey is a more open world--a world where a broad set of asset classes are accessible globally, to computers and humans. And that is toothpaste I believe in.