Charles Hoskinson, founder of the proof-of-stake blockchain, Cardano, recently expressed his dismay with the US Securities and Exchange Commission (SEC)'s latest claims in a sarcastic remark on Twitter. A committee of the SEC, the Investor Advisory Committee (IAC), had requested that all crypto tokens be treated as securities and enforced accordingly. This approach had been suggested to protect investors from potential risks in the crypto industry and to target unreasonable profit-seeking of minorities.

In response to this request, Gabriel Shapiro, the General Counsel at Delphi Labs, quoted that crypto posed a threat to investors and ethnic minorities, to which Hoskinson added that crypto is "racist". This reply started a debate regarding how regulatory enforcement will affect the crypto industry and its investors. Some support the move to protect investors, whereas others fear that too much regulation will stunt innovation and development.

Moreover, it is important to take into account the view of investors from minority communities, especially since they could miss out on potential wealth-building opportunities due to 'protection'. In their April 6th letter to the SEC, the IAC highlighted that 44% of Americans who own and trade crypto are people of color, 41% are women, and more than 35% have annual household incomes under $60,000. They also noted the $2 trillion worth of losses suffered by the industry, plunging from its record high of $3 trillion from last year.

While these regulations are in place to protect investors, it is essential to think about their implications carefully, especially from the perspective of minority communities. If done incorrectly, the impact of this move could be more detrimental than beneficial. Therefore, it is worth considering alternative regulatory strategies, such as collaboration and engagement, that would still achieve the desired goals without impairing innovation.



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