How to start regulating the crypto markets—immediately

livemint.com:

Only someone who has been living under a rock could think cryptocurrency markets don’t need stronger regulation. The implosion of FTX, the collapse of the TerraUSD “stablecoin," and the recent bankruptcy of crypto lenders and hedge funds—all causing massive losses to investors—provide ample evidence that digital assets should be regulated just like practically all other financial products and services. Yet there is continued risk that the road to compliance with basic regulatory principles, in the U.S. and globally, will be rough.

This risk is partly the result of the widely divergent and often emotional responses crypto has triggered since it began. Charlie Munger has referred to crypto tokens as “partly fraud and partly delusion," while many successful venture investors believe tomorrow’s financial infrastructure will be based on crypto technology. Each camp believes the government should act in furtherance of their view.

The unique genesis of crypto assets has also complicated the regulatory challenge. Unlike other financial innovations, bitcoin was launched globally and directly to retail consumers, with a claim that it would make traditional intermediaries obsolete. Because financial regulation is implemented on a national basis and largely through intermediaries, this “global retail" path of emergence has challenged regulators as traditional tools are less effective. Adding complexity, the use case of many crypto assets is often cloudy: Does a particular token provide an investment opportunity, access to goods or services, or a banklike product?

These factors, coupled with our fragmented financial regulatory system, in which multiple regulators have overlapping roles to play, have slowed the application of basic