Regulation could choke crypto innovation, says Laguna Labs’ CEO
“The very foundation of cryptocurrency is one that is antithetical to global regulation and the centralised financial system that regulators seek to uphold and protect,” says Stefan Rust.
Cryptocurrency regulation is being introduced in various parts of the world. While many people in the industry are welcoming this latest development, Laguna Labs’ CEO Stefan Rust, thinks that regulation could choke crypto innovation.
In his exclusive discussion with Coinjournal, Rust drove home his point by discussing some of the current cryptocurrency bills around the world.
One bill under discussion will require a 1-to-1 reserve backing for USD-pegged stablecoin providers, while a second would force full disclosure of reserve assets by USD stablecoin providers. Now, a third bill is under discussion that would be extremely limiting for algorithmic stablecoins.
This legislation would reportedly see the US Securities and Exchange Commission (SEC) introduce a two-year ban on the creation or issuance of new algorithmic stablecoins, while the regulator gets to grips with what it sees as a dangerous threat to the global financial ecosystem.
He added that the EU is readying to publish its long-awaited Markets in Crypto Assets Regulation Act (MiCA), which will reportedly require crypto companies to register with the authorities, hold sufficient capital to back stablecoins, and offer clear information to new investors.
However, Rust pointed out that one of the main reasons Bitcoin was created was to ensure that people became financially free. The government was used to bailing out financial institutions despite putting economies in recession numerous times.
Although Rust supports regulating the cryptocurrency market, he believes that it would be best achieved via self-regulation. Rust added that self-regulation drives innovation, especially in the cryptocurrency space. He revealed that;
“At Laguna Labs, we’ve been working on a “flatcoin” – a type of token that holds its purchasing power from the moment it’s bought, to the moment it’s sold. Our flatcoin – Nuon – is pegged to a basket of consumer goods and services that represent the rising cost of an average person’s standard of living – a far more accurate representation of value for the average person than $1.”
Rust added that Nuon holds its peg via a dynamically adjusting algorithm. Unlike UST, though, it is fully collateralised by exogenous tokens like BTC and ETH. Most importantly, though, Nuon is entirely decentralised.
He pointed out that most investors believe that crypto should offer real and viable alternatives for average people to transact, save and invest in a way that preserves, protects, and grows their wealth, privacy, and independence.
Privacy and independence of investors would be affected if centralised regulation is introduced into the cryptocurrency space, Rust concluded.
Rust made his opinion known a month after the US SEC set up an office that focuses on crypto assets.