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Wu says the notion that crypto doesn’t want regulation is not true
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China’s crackdown helped innovation come to the US
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Centralised stablecoin should be strictly regulated to reassure investors and users
Ava Labs president John Wu says that the majority of firms and businesses in the crypto space would prefer to operate in an environment where regulations and sensible and appropriate.
Wu said this during on CNBC’s “Closing Bell”, just hours after the US president’s working group on financial markets released its report.
“The biggest misnomer out there is that crypto firms and people do not want that. Actually, most crypto firms want that… they want sensible and appropriate regulation,” Wu said.
The US doesn’t need a China-like crackdown
The Ava Labs exec says the US would do well to avoid insensible, harsh regulations, bordering on what happened in China earlier this year.
Wu, a founder and former CEO of SureView Capital, says a lack of proper regulation could send developers and other crypto minds out of the US, which would be a loss to the ecosystem.
The US does not need to go this way, Wu noted, adding:
“We want innovation to stay in this county. When China first came up with the mining regulations and later transaction regulations, what you saw was the Bitcoin mining hashrate dropped 40%…and guess where it all picked up later on- in the US, a lot of it in western Texas.”
Going the Chinese way should be the last thing US regulators should be aiming at as they look to regulate crypto firms and stablecoins, Wu added.
Centralised stablecoins need proper regulation
He also talked about regulatory approaches to stablecoins, a hot topic in the US at the moment after the PWG called for regulators to apply bank-like measures to issuers.
One of the recommendations put forward by the Treasury-led group is for stablecoin issuers to be subject to laws similar to those applicable to depository institutions, with strict supervision from the Fed and other banking regulators.
According to Wu, it is proper to have regulations in place, especially with regard to centralised stablecoins like USD Coin (USDC) and Tether (USDT), as that gives people and investors the comfort of knowing all the assets they hold are 100% backed.
But he notes that regulating decentralised stablecoins is different.
“The collateral is on-chain, a lot of the disclosure and visibility that a banker or regulator would have in a normal centralised environment is all on-chain,” he noted.
This, according to Wu, is advantageous as anyone can have a look at it. However, he feels there should be further exploration and understanding of the space before formulating appropriate regulations.
Ava Labs is the firm behind Avalanche (AVAX), a layer 2 protocol built on the Ethereum network. The protocol is currently the 14th largest cryptocurrency with a market cap of $14.5 billion.