The SEC Cracks Down on Crypto: Find out the latest developments as the SEC takes a closer look at the cryptocurrency market. Stay informed and protect your investments.
The SEC Cracks Down on Crypto
Now, suppose you want to regulate this company. What do you do?
One thing you could do is to require the company to hold a certain amount of assets in reserve, in order to back up the receipts it has been issuing.
You could require, for example, that the company hold one dollar in reserve for every dollar’s worth of receipts it has issued. But there’s a problem with this approach.
The company could just issue more receipts, without holding any extra assets in reserve. So this approach wouldn’t really work. Another thing you could do is to require the company to hold assets in reserve, but to choose those assets in a clever way.
For example, you could require the company to hold assets in reserve that are very unlikely to lose value. But there’s a problem with this approach too
At a very high level of generality, what do you think about that? What I would say is:
In 2013, you were likely not too concerned about fraud in the crypto world. After all, most of these entities were small and catered to a niche group of crypto enthusiasts. And it’s not like they were coming to your office for meetings.
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