Maxim Kurbangaleev: the dilemma of crypto industry regulator

In 2021, the crypto industry attracted $30 billion in venture capital investment, more than the market has attracted since its inception. Maxim Kurbangaleev explains:

“It indicates that the interest in digital currency is growing exponentially. Such a high temperature and rush are fueled by consumer demand. That means an autonomous existence without regulation and stable market rules is impossible”.

The Start of the Crypto Industry 2008-2013 – Maxim Kurbangaleev

“It’s a time of Bitcoin development. There is only Bitcoin and its derivative products” – tells us Maxim Kurbangaleev.

This period can be associated with a warm bath for cryptocurrency. It’s not taken seriously in the banking and public sector, and people buy pizza for bitcoin to experiment with. 

The appeal of anonymity has created precedents. Maxim Kurbangaleev clarified:

“We can remember the Silk Road store scandal – selling bitcoin for controlled substances, weapons, content”.

The other case from this period is the scam of Mt. Gox Bitcoin Exchange. At the extreme point, the Bitcoin Exchange handled 70% of all bitcoin transactions and later collapsed when users’ digital assets worth more than $450 million were lost. 

Maxim Kurbangaleev added:

“Big financial scandals were a signal to the regulator that there is an alternative to fiat money”.

2013-2015 blockchain boom: tokens and cryptocurrencies

“Blockchain technology was further redefined and applied in smart contracts in 2013” – Maxim Kurbangaleev.

Such projects as Bitshares and Etherium emerged during this period. Blockchain is not only an alternative to money, but it has affected the decentralization of almost any process nowadays.

Scaling of blockchain projects – 2015-2018

Maxim Kurbangaleev explained: 

“This is a period of token rampage. There are a lot of different projects: from sand quarries on blockchain to distributed AI. The projects started to attract huge capital, and investors started to lose money”. 

These trends led market regulators to look towards technology, realizing that they missed the moment when the situation got out of control.

Time of De Fi, farming, NFT – Maxim Kurbangaleev

Maxim Kurbangaleev says:

“After a long crypto-winter, the cryptocurrency comes to the market with De-FI and later with pharming and steaking, NFT, which Bitshares had in 2014”.

Poor regulators have not been able to deal with cryptocurrencies and stable tokens in time, are receiving even more financial threats from a digital asset they do not understand.

What did the regulator decide? To ban everything – Maxim Kurbangaleev.

The lack of control over the fast-growing cryptocurrency market led the regulator to go through prohibitions and attempts to regulate the industry.

Maxim Kurbangaleev clarified:

“With the help of services, crypto chain investigations, regulators began to pursue crypto businessmen and companies: imprison, revoke licenses, seize accounts. In anger for all the past omissions”.

Until 2020, no one who received the cryptocurrency could verify its trail and know from which site or purse it came to a person. Everyone just made transactions and changed with cryptocurrency.

Conversely, the regulator needs to have control tools. However, it has begun to apply contradictory logic to the digital industry.

“A person gets cash from an ATM, a bank, change in the store, and can’t be responsible for the fact that the funds were previously owned by some drug dealer, criminal or corrupt, right? – Maxim Kurbangaleev says, – If to talk about cryptocurrency, the logic is reversed. A transaction in which someone receives a digital token, previously involved in another illegal transaction, automatically blames the new owner. Thus, exchanges and services have failed”.

There is a feeling that officials for a long time did not understand what to do with it. And as soon as they had the opportunity and money, they decided to prove that they were doing their job for a reason and then they started intimidating the whole industry.

Maxim Kurbangaleev explains:

“The problem is that in the absence of alternatives, this approach leads to economic stagnation. Other countries like China will leave the world far behind. Since they tighten the rules, they offer an alternative in the form of their national system”.

Maxim Kurbangaleev continues:

“There are other traditions and approaches to regulation in the West. I believe a middle ground is needed”.

We may also understand the regulators. If you don’t limit the market at all, you can accidentally open Pandora’s box.

“The solution to this problem is seen in approaches, – Maxim Kurbangaleev explained, – this could be the development of a joint sandbox with the market in which the application of various financial technologies and its regulation can be tested. All in all, after successful testing to put these solutions on the market”.