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For many people in crypto, the way that regulators are approaching the industry is unique and can at times seem unnecessarily adversarial. For those with prior experience in nascent industries, it bears remarkable similarities to how other technologies have seen regulations imposed on them.

For many people in crypto, the way that regulators are approaching the industry is unique and can at times seem unnecessarily adversarial. For those with prior experience in nascent industries, it bears remarkable similarities to how other technologies have seen regulations imposed on them.

Five years ago the drone industry was locked in a similar battle with regulators seeking to impose strict controls over non-commercial users. The main focus of regulators’ interests were unskilled, uneducated members of the public who couldn’t be trusted to fly a drone in the air without the risk of bringing down an airliner.

The media was filled with regular articles about near misses and the impending doom of a 737 crashing into the ground because it had come into contact with a drone. To most readers unfamiliar with aviation it sounded entirely plausible and public opinion was easy to form.

Anyone seen flying a drone was considered to be recklessly endangering people or spying on their neighbors. In a similar fashion public opinion has been shaped to characterize anyone investing in crypto as financially reckless, gullible, or engaged in illegal activities.

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It’s no coincidence that the media routinely portrays the public as being at risk unless regulators step in to protect them. With drones, people’s lives and privacy were at risk. With crypto, it’s their life savings and financial security at risk.

In relation to drones, the regulators were pitched against the manufacturers. With crypto, regulators are being pitted against project founders and developers. In both circumstances, however, powerful lobbyists push regulators to intervene. They may be different lobbyists but their motivations are identical.

Due to the fragmented nature of the drone industry, it was difficult for manufacturers to work together to lobby politicians and regulators effectively. There was a belief that one manufacturer would be able to have more influence than others which would result in a commercial advantage for them. Hence, any alliance was pervaded by mutual mistrust and competitiveness.

In reality, the regulators and politicians weren’t interested in helping manufacturers, they were more interested in the lobbyists pushing for tighter regulation. Amazon invested huge resources into its lobbying efforts as it believed drone technology was crucial to the company’s growth plans. They promised politicians great increases in GDP and recommended tighter controls to regulators.

At the same time stricter measures were being imposed on the public’s use of drones, Amazon was granted greater freedom in their testing of the technology in the UK and elsewhere. The reason this benefitted Amazon greatly was that they didn’t want the public interfering with their delivery routes by flying their own drones and cluttering up the skies.

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Despite the fact that no airliner has ever crashed due to hitting a drone the public view had been created and firmly cemented. Manufacturers were forced to create smaller drones that would avoid most regulations and many were unable to compete in a diminishing marketplace. Meanwhile, Amazon discovered that the costs of implementing drone deliveries were too prohibitive and the media frenzy quietly abated.

At the moment crypto is facing its own battle with regulators and powerful lobbyists. Just like the drone industry, blockchain projects are diverse and disparate. While individual chains and projects focus on outcompeting their rivals, distrust and maximalism threaten to disrupt their attempts to lobby regulators.

Meanwhile, the most powerful banks and investors such as BlackRock are successfully shaping the media narrative and directing regulators to view almost all cryptocurrencies as assets in dire need of regulation. Their reasons for so doing are the same as Amazon’s before. They recognize the commercial benefits of the technology for their own businesses.

A standard narrative amongst crypto influencers is that the next bull run will be driven by large-scale investors coming into the market after regulations have been imposed. What they fail to understand is that regulations seek to restrict public access to the markets and protect institutions.

The last thing the banking industry wants is any form of secure peer-to-peer transfers of money as that threatens to put them out of business. The last thing institutions want is a repeat of the RobinHood/Gamestop incident where retail investors caused hedge funds to lose around $20 billion.

The future is clear, either the industry learns to work together to protect the fundamental tenets of Satoshi’s whitepaper, or everyone will lose when the banks move in to take their place at the table.

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