Do we need more rules about tech or faster regulators?

The world of innovation and the world of law and regulation are usually at odds with one another. Disruptors and startups obviously prefer as few regulations as possible in their newly minted and untapped blue ocean market. Simultaneously, they feel that regulators should focus on the old-timers in the red ocean, the established market where there is a lot of competition. 

Rules Tech Ph

It’s pretty ironic that when Silicon Valley Bank (SVB) collapsed, the startup and venture capitalist community suddenly and emphatically demanded that the government would intervene and save their hides. And that's what happened. SVB was rescued and not a single customer lost a single dollar. The government guaranteed that all startups and venture capitalists saw their deposits fully compensated. Many in the United States saw this as pure favoritism. They felt that, if an agricultural bank in the Midwest had collapsed, the farmers would probably have lost their money.

A crypto crusade

One of the most remarkable skirmishes between innovation and regulation has been taking place in the world of cryptocurrencies. Gary Gensler, the head of the Securities and Exchange Commission (SEC), the US regulator of securities markets, is on a true crusade against cryptocurrencies. The SEC launched a high-profile lawsuit against Ripple, which developed the XRP cryptocurrency as a way to transfer money internationally, a competitor to the SWIFT payment system.

According to Gensler, XRP tokens are securities and therefore subject to SEC rules. What’s more, Gensler recently stated that he believes that every cryptocurrency - except bitcoin - is a security and must therefore follow the strict rules for "regular" stocks. Suffices to say that this has made him pretty unpopular in the crypto world, with nicknames like "the Cruella de Vil to crypto’s 101 market caps". Ripple's head of legal even called his behavior "gross misconduct" because Gensler's statements have created chaos and legal uncertainty for those 40 million Americans who own cryptocurrencies.

The outcome of this dispute will have a huge impact on the crypto world. Even if innovation is moving at breakneck speed, regulators will always catch up, eventually.

The absurdity of an AI pause

The cry for more regulation is nowhere louder than in the current debate about artificial intelligence, of course. In my 30-year IT career, I have never seen a technology evolve so quickly, with the potential for such massive economic and societal disruption. But I also feel it's absurd that more than a thousand entrepreneurs, thinkers, and scientists - some of which pretty renowned and influential - are calling for a 6-month pause on AI development. If only because it's naive to think that cybercriminals will also be prepared to take a 6-month break. Surprisingly, even the Elon Musks of this world want more rules and guardrails. But it feels a bit like calling for a referee in a sports game that is still being invented.

I have been on the board of directors of the Belfius Bank for two years now. This has greatly influenced my perspective on the role of the regulator. Whereas I used to naively regard all types of regulation as a major obstacle to innovation, I have now experienced how it has also greatly strengthened the financial system. Even though it also came at a colossal cost to the banks.

This symbiosis has indeed worked out pretty well in the established financial world. Just look at the difference between the regulated financial world and the collapse of the crypto platform FTX. But in the world of technology, we still have this huge gap. Solving that will probably be one of the biggest global challenges. But we don't need more rules. We need more regulators who can respond faster, more alertly, and more flexibly to technological innovation and change.

If you want to explore the opportunities (and challenges) of the Never Normal together with me and Isabel Albers, General Editor-in-chief De Tijd - L'Echo, join nexxworks and Mediafin on The Never Normal Tour in New York in June! Together, we'll spot ultra-relevant trends and threats, master how we can become better at uncovering these ourselves, learn to understand the dynamics of complex systems, find out how we can survive and thrive in the Never Normal and explore the industries of the future!

This piece is an adaptation of an earlier one that was published in Dutch in De Tijd.

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